-12345678910Consider a market in which three firms compete as quantity setters (i.e. firms are engaged in Cournot competition), and the market demand curve is given by Q=6,000-10P. All firms have constant marginal cost equal to 100. In equilibrium, quantity supplied by each firm and the price are:Q-5000 and P = 100Q=1000 and P = 200Q=2500 and P = 225Q=1250 and P = 225WidgetWidget is a commodity that is traded in a perfectly competitive globalmarket that consists of many small price-taking firms. The firms fall in threecategories with the following characteristics:Number offirmsType 1Type 2Type 310010050Capacity offirm's plant(units peryear)120 units100 units100 unitsAVC ($ perunit)203030Fixed costper unit atfull capacity($/unit)253550• Assume that each firm's AVC is constant up to the capacity of its plant.Further, assume that once built, a firm's plant has zero redeploymentvalue. Finally, assume that a typical entrant has a cost structureidentical to the Type 1 firms and that there are many potentialentrants. Investment cost of a Type 1 firm is 15000 and annual interestrate is 8%.• The demand for widgets is Q-35000-200P, where P is $ per unit andQ is measured in units per year.The short-run equilibrium price in the world widgets market isType your answer...The short-run equilibrium quantity in the world widgets market isType your answer...D-1In the short-run equilibrium:The combined equilibrium quantity of widgets supplied by Type 1 firms is

Total revenue is the product of price and quantity. So , TR = P × Q Marginal revenue is the revenue…

Consider a market in which three firms compete as quantity setters (i.e. firms are engaged in Cournot competition), and the market demand curve is given by Q= 6,000-10P. All firms have constant marginal cost equal to 100. In equilibrium, quantity supplied by each firm and the price are: Q-5000 and P-100 Q-1000 and P-200 Q=2500 and P = 225 Q=1250 and P = 225

Consider a market in which three firms compete as quantity setters (i.e. firms are engaged in Cournot competition), and the market demand curve is given by Q= 6,000-10P. All firms have constant marginal cost equal to 100. In equilibrium, quantity supplied by each firm and the price are: Q-5000 and P-100 Q-1000 and P-200 Q=2500 and P = 225 Q=1250 and P = 225

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter9: Market Structure And Long-run Equilibrium

Section: Chapter Questions

Problem 2MC

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