Assume that the countries of Irun and Urun are the only two producers of crude oil. Further assume that both countries have entered into an agreement to maintain certain production levels in order to maximize profits. In the world market for oil, the demand curve is downward sloping. Refer to Scenario 16-1. The fact that both countries have colluded to earn higher profit shows their desire to keep production levels above the monopoly level of output. below the Nash equilibrium level of output. equal to the Nash equilibrium level of output above the Nash equilibrium level of output.

Assume that the countries of Irun and Urun are the only two producers of crude oil. Further assume that both countries have entered into an agreement to maintain certain production levels in order to maximize profits. In the world market for oil, the demand curve is downward sloping. Refer to Scenario 16-1. The fact that both countries have colluded to earn higher profit shows their desire to keep production levels above the monopoly level of output. below the Nash equilibrium level of output. equal to the Nash equilibrium level of output above the Nash equilibrium level of output.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

In 1980, in response to the Soviet invasion of Afghanistan, President Jimmy Carter imposed a grain embargo prohibiting the sale of American grain to the Soviet Union. The Soviets adapted and got grain from elsewhere. The Chinese, in response to Trump’s tariffs, stopped buying U.S. soybeans, getting them instead from Brazil. There is little evidence that such embargoes put any real economic pressure on their targets. When a government embargoes the products of another country what other, potentially unintended and/or negative consequences could you imagine from that act? (100 words maximum)
Aspen is in house arrest and is not allowed to buy stuff online. She wants a new iPhone and is willing to pay up to $5000 dollars for it. You and I both pay $1000 to buy an iPhone (Assume she only has the option to buy from one of us). Which one of the following statement is true about how much Aspen will pay for the iPhone? Competition between us will lead Aspen to pay 1200 dollars for the iPhone Competition between us will lead Aspen to pay $5000 dollars for the iPhone Aspen will pay exactly $1350 for the iPhone because her demand is inelastic Aspen will pay $5000 dollars for the iPhone, only if we can collude
Consider the following static game with two firms as the players. Each firm must decide either to upgrade (U) an existing good to a new version; or not upgrade it (N). The decisions are simultaneous. If a firm chooses to upgrade, they have to pay a fixed cost of 7. If they don’t upgrade, there is no fixed cost. The marginal cost is always equal to 3. The demand side of the market is as follows: If neither firm upgrades, each firm sells 2 units at price 4. If both firms upgrade, each firm sells 3 units at price 5. If only one firm upgrades, the one who upgrades sells 5 units at price 5, and the other firm does not sell anything.
There are two firms in a market and they compete in a Nash-Cournot manner. Firm 1 faces the demand function p1(g1,92) = 200 - 91 - 92, and has a total cost function TC1 = (91)2. Firm 2 faces the demand function p2(91,92) = 160 - 92 - 91, and has a total %3D cost function TC2 = (92)2. Answer each of the following questions. a. Find the Nash-Cournot equilibrim output and price v for firm 1. b. Find the Nash-Cournot equilibrim output v and price v for firm 2.
Suppose that there are two competing types of high-definition DVD players, Greenbeam and Mosdef, and each uses a different format. The DVD players are subject to network externalities: the more people who use one type of player, the more production companies adopt that particular format for their movies, and the greater the value of that player to each user. Greenbeam and Mosdef entered the market at around the same time. Which of the following is likely to happen if Greenbeam sells its DVD players at its profit-maximizing price, but Mosdef sells its DVD players at a much lower price than Greenbeam's at the early stages? O Mosdef will dominate the market for high-definition DVD players. O Greenbeam will dominate the market for high-definition DVD players. Greenbeam and Mosdef will have equal market shares. O Neither Greenbeam nor Mosdef will succeed, and a new company could easily enter and dominate the market. OO
Two firms are engaged in Cournot (simultaneous quantity) competition. Market-level inverse demand is given by P = 160 − 4Q Firm 1 has constant marginal costs of MC1 = 8, while Firm 2 has constant marginal costs of MC2 = 24. 1) Does there exist a low enough positive marginal cost for firm 1 such that firm 1 acts like a monopoly in this market, if so what is the MC if not why?
Two firms, Incumbent & Entrant, can produce the same good. The market demand for the good is given by P = 180 – Q, where P is the market price and Q is the market quantity demanded. The firms must pay w = 45 per unit of output for labour and r = 45 per unit of output for capital (one unit of capital is used per unit of output), but Incumbent may choose capacity KI units of capital before Entrant decides whether to enter the market. Suppose firms each have fixed costs FI =600, FE=500. Incumbent chooses (as a Stackelberg leader) capacity KI equal to the monopoly profit- maximizing quantity. When you answer the following questions, show your work. a. Would Incumbent be able to prevent entry by choosing capacity KI equal to the monopoly profit-maximizing quantity? Explain. b. What is the Incumbent’s equilibrium choice of capacity KI in this Dixit game? c. Does the Incumbent’s choice of capacity KI in part (b) qualify as predatory conduct (here, limit output)? Explain.
QUESTION 13 Consider a market where two firms (1 and 2) produce differentiated goods and compete in prices. The demand for firm 1 is given by D₁(P₁, P2) = 140 - 2p1 + P2 and demand for firm 2's product is D2 (P1, P2) 140 - 2p2 + P1 Both firms have a constant marginal cost of 20. What is the Nash equilibrium price of firm 1? (Only give a full number; if necessary, round to the lower integer; no dollar sign.)
Consider the following simplified scenario. Imagine that the Australian national rugby union (for short, Rugby AU) has exclusive rights to organize the games played by the national team. Rugby AU decides that the next match, between the Wallabies and the All Blacks (i.e., the Australian and the New Zeeland national rugby teams), will be hosted at the Marvel Stadium in Melbourne. Rugby AU has no fixed costs for organizing the game, but it must pay a marginal cost MC of $20 per seat to the owners of the Marvel Stadium. Two types of tickets will be sold for the game: concession and full fare. Based on any official document that attests to their age, children and pensioners qualify to purchase concession tickets that offer a discounted price; everyone else pays the full fare. The demand for full-fare tickets is QF(P) = 120 – 2P. The demand for concession tickets is QC(P) = 80 – 2P. 1. The market for full fare tickets (F)a) Calculate the inverse demand, write the profit maximizing…
Consider the following oligopolistic market. In the first stage, Firm 1 chooses quantity q1₁. Firms 2 and 3 observe Firm 1's choice, and then proceed to simultaneously choose 92 and 93, respectively. Market demand is given by p(Q) = 100 – · Q, and Q = 9₁ +92 +93. Firm 1's costs are c₁ (9₁) = 591, firm 2's costs are c₂ (92) = 492 and firm 3's costs are C3 (93) = 493. C2 Starting from the end of the game, you can express Firm 2's best response function in terms of 9₁ and 93, and you can similarly express Firm 3's best response function in terms of 9₁ and 92. Using these, answer the following questions. If rounding is needed, write your answers to 3 decimal places. a) If Firm 1 chooses q₁ = 3, what quantity will Firm 2 choose? b) If Firm 1 chooses 9₁ = 100, what quantity will Firm 2 choose? c) In the subgame perfect Nash equilibrium of this game, firm 1 produces what quantity? d) In the subgame perfect Nash equilibrium of this game, firm 2 and firm 3 each produce what quantity?
Using the Surplus Approach, describe how tendencies for concentration emerge from the regular functioning of competition between capitalist firms.
Two countries decide to specialize in producing certain goods to export to other countries, and in return they import different goods from these other countries. The advantage of these exports and imports is: Group of answer choices the country will be able to produce at a point outside your production possibilities frontier. the country will be able to consume at a point outside your production possibilities frontier. the countries will be able to produce and consume at a point outside your production possibilities frontier. the country's production possibilities frontier will shift outward.