Calculate and compare the output levels and profits for Stackelberg and Bertrand competition. Use the following cost and demand conditions for your comparison and suppose there are two firms in the beverage industry: P = 1,500 − 10Q. Each firm has a marginal cost of $20 and fixed costs of zero. Under the Bertrand model, each firm produces 74 units of output, and t
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Calculate and compare the output levels and profits for Stackelberg and Bertrand competition. Use the following cost and demand conditions for your comparison and suppose there are two firms in the beverage industry: P = 1,500 − 10Q. Each firm has a marginal cost of $20 and fixed costs of zero.
Under the Bertrand model, each firm produces 74 units of output, and the profit that both firms obtain are zero.
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- 9 . Perfect Competition The market for peanut butter in Nutville is monopolistically competitive and in long-run equilibrium. The following graph shows the marginal-cost (MC) curve and the average-total-cost (ATC) curve for a peanut-butter-producing firm. It also shows the demand curve and marginal-revenue (MR) curve faced by a firm operating in a monopolistically competitive environment. On the following graph, use the black point (plus symbol) to show the profit-maximizing output and price for a typical firm operating in a monopolistically competitive environment. Demand Profit Max Under MC Perfect Comp. Outcome ATC MC MR Quantity Price, Cost, RevenueSuppose that you are a manager for a firm like EBC Brakes, which manufactures brakes for automobiles and motorcycles. Your company has two plants, one in the United States and the other in the United Kingdom. The following tables include estimated demand and marginal revenue for your brakes, along with the marginal costs at the two factories. what quantity and price maximize your firms profit? What is the profit – maximizing number of brakes produced in the U.S. plant? In the U.K. plant? Quantity Demanded (brakes per hour) Price (dollars per brake) Quantity Produced in the U.K. plant (brakes per hour) Quantity Produced in the U.S. (brakes per hour) Total Quantity Produced Marginal Cost (dollars per brake) Marginal Revenue (dollars per brake) 104 196 47 42 89 66 92 105 195 48 44 92 68 90 106 194 49 46 95 70 88 107 193 50 48 98 72 86 108 192 51 50 101 74 84 109 191 52 52 104…The fastfood industry can be considered a perfectly competitive industry between two competitive firms: Jollibee and McDonalds. The total cost function of one of the firms is expressed by C(Q) = 100 + 4Q2, and demand is P = 80 – 4Q Find the equilibrium price and total quantity that the industry produces. Suppose that Jollibee successfully acquired McDonalds through a hostile takeover. What would be the new equilibrium price and quantity if MR = 80 – 4Q? Is this hostile takeover beneficial?
- The Canadian retail market for roasted whole coffee beans is dominated by two firms: Tim Hortons (T) and Kicking Horse (K). The market demand function is given by P(Q)=64−0.5Q. Assume it is possible to produce partial units of output. Kicking Horse's marginal cost for each kg of roasted coffee beans is $3. Tim Horton's marginal cost for each kg of roasted coffee beans is $5 (although they've been around longer than Kicking Horse, they've only recently expanded their product line for consumers to brew their own coffee at home). What is the Cournot market equilibrium (P and Q)?The Canadian retail market for roasted whole coffee beans is dominated by two firms: Tim Hortons (T) and Kicking Horse (K). The market demand function is given by P(Q) = 64 – 0.5Q. Assume it is possible to produce partial units of output. • Kicking Horse's marginal cost for each kg of roasted coffee beans is $3. • Tim Horton's marginal cost for each kg of roasted coffee beans is $5 (although they've been around longer than Kicking Horse, they've only recently expanded their product line for consumers to brew their own coffee at home). What is the Cournot market equilibrium (P and Q)?Price-discriminating firm Cho owns a plot of land in the desert that isn’t worth much. One day, a giant meteor falls on her property. The event attracts scientists and tourists, and Cho decides to sell nontransferable admission tickets to the meteor crater to both types of visitors: scientists (Market A) and tourists (Market B). The following graphs show demand (D) curves and marginal revenue (MR) curves for the two markets. Cho’s marginal cost of providing admission tickets is zero. I hope you can see a clear picture.
- Use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 10 firms in the market. (Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 15 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 20 firms. PRICE (Dollars per pound) 100 90 80 70 80 50 40 30 20 10 0 0 125 250 375 500 825 750 875 1000 1125 1250 QUANTITY (Thousands of pounds) Demand Because you know that competitive firms earn Supply (10 firms) True Supply (15 firms) If there were 10 firms in this market, the short-run equilibrium price of rhodium would be $ would . Therefore, in the long run, firms would False Supply (20 firms) per pound. From the graph, you can see that this means there will be ? per pound. At that price,…Consider an industry where there is perfect competition (with the conventional horizontal long-run market supply curve). Initially, all of the firms are making zero economic profit, then, the price of an important input falls so that firms all make positive economic profit in the short run, but in the long run economic profit returns to zero. Draw this using a two-panel diagram. Draw the representative firm panel on the left-hand-side and the market panel on the right-hand-side. Your diagram must be carefully drawn and properly labelled. Explain why, referring to your diagrams, in the long run profit returns to zero. ( maximum word limit: 150 words)1. if the total cost function for this market is TC = 500 + 10Q2 , calculate the total and marginal costs for each of the quantities in the table. what is the demand function for this market? 2. What are the profit-maximizing quantity, price, and profit for this market? 3. If there are two firms Atlas and Bowden in this market with the same earlier total cost function and they engage in Cournot competition, what is each firm's equilibrium quantity, price, and profit? [NB: round quantities to nearest integer to find equilibrium quantity, price, and profit]
- Kindly answer all 3 little mcq questions Question: A firm operating in a perfectly competitive environment faces the following costs and revenues: ATC = $8; AVC = $4; and MR = MC = $6. This firm should: Shut down Decrease production and raise its Increase Continue to operate Ques: In the long run the demand curve that a monopolistic competitor faces for its product will likely: Intersect the ATC at its minimum Intersect the ATC curve somewhere past the minimum Become tangent to the ATC curve somewhere left of its minimum None of the Ques Monopolistically competitive firms are most likely to have profits: That are higher than competitive firms’ profit in the long Higher in the long run than in the short Zero in the long run Equal to the profit of aSuppose two food trucks face the following market demand curve and have the same marginal revenue and marginal cost curves. This means they both face the same costs, $1 per meal. Demand: P = 21 - 0.1QD Marginal Revenue (MR): P = 21 - 0.2QD Marginal Cost (MC): $1.00 Suppose that one of the food trucks decides to break the agreement and produce 60 meals per day. What will be the price charged per meal? Suppose that one of the food trucks decides to break the agreement and produce 60 meals per day. What will profit be for this food truck (the one that is now producing 60 meals)? What happened to the profits for the food truck that kept to the agreement and produced 50 meals? In retaliation for not keeping to the agreement, the other food truck has increased its production to 60 meals as well! Now, 120 total meals are being produced each day. What price will be charged per meal? With 120 total meals being produced each day, what will each firm earn in profits? After…21. In the industry, only two firms (Firm 1 and Firm 2) operate and they produce a homogenous good. They collude: they maximize their joint profit and split it equally between them. Firm I has the total cost of producing q; units of output given by the function TC(q)-8q1. The total cost of producing q: units of output for Firm 2 is TC(q)-q. Only integer quantities are allowed (no fractions). The market demand for the good is Q(P)-72-P, where Q is the quantity demanded and P is the unit price of the good. How many units of the good do cach firm produce in the equilibrium? A. Each firm produces 14 units. B. Firm I produces 32 units, and Firm 2 produces 2 units. C. Firm 1 produces 28 units, and Firm 2 produces 4 units. D. Each firm produces 16 units. E. None of the above