Consider a quantity competition setup with two firms simultaneously choosing the quantities. The market demand function is given by P = 100 − Q. The total cost function of a firm is given by T Ci = F + 10qi if qi > 0 0 otherwise. (a) For what value of the fixed cost F, we are going to have multiple equilibrium?
Consider a quantity competition setup with two firms simultaneously choosing the quantities. The market demand function is given by P = 100 − Q. The total cost function of a firm is given by T Ci = F + 10qi if qi > 0 0 otherwise. (a) For what value of the fixed cost F, we are going to have multiple equilibrium?
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter13: Firms In Competitive Markets
Section: Chapter Questions
Problem 8PA
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2. Consider a quantity competition setup with two firms simultaneously choosing the quantities. The
market demand function is given by P = 100 − Q. The total cost function of a firm is given by
T Ci = F + 10qi if qi > 0
0 otherwise.
(a) For what value of the fixed cost F, we are going to have multiple equilibrium?
(b) For what values of the fixed cost F, we are going to have at least one firm producing zero quantity
as an equilibrium?
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