a. Firm 1 chooses q₁ SMALLER than the static best response to q2 because this moves total output closer to the monopoly output.92LARGER than the static best response to 9₂ because this moves total output closer to the monopoly output.b. Firm 1 chooses 9₁c. 9₁Consider a Stackelberg duopoly in which firm 1 sets q 1'2°, firm 2 observes q, and then chooses q1is a static best response to 9292O d. Firm 1 chooses q₁ LARGER than the static best response to because this results in a smaller

Consider a Stackelberg duopoly in which firm 1 sets q₁₁ , firm 2 observes q, and then chooses q 1 2° O a. Firm 1 chooses q, SMALLER than the static best response to q2 because this moves total output closer to the monopoly output. 1 ●b. Firm 1 chooses q₁ LARGER than the static best response to a because this moves total output closer to the monopoly output. ¹2 1 OC. 9₁ is a static best response to 92 92 O d. Firm 1 chooses q, LARGER than the static best response to q because this results in a smaller 1

Consider a Stackelberg duopoly in which firm 1 sets q₁₁ , firm 2 observes q, and then chooses q 1 2° O a. Firm 1 chooses q, SMALLER than the static best response to q2 because this moves total output closer to the monopoly output. 1 ●b. Firm 1 chooses q₁ LARGER than the static best response to a because this moves total output closer to the monopoly output. ¹2 1 OC. 9₁ is a static best response to 92 92 O d. Firm 1 chooses q, LARGER than the static best response to q because this results in a smaller 1

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter17: Oligopoly

Section: Chapter Questions

Problem 4CQQ

See similar textbooks

Similar questions

Consider a Stackelberg duopoly in which firm 1 sets q, firm 2 observes y, and then chooses Ⓒa. Firm 1 chooses q, SMALLER than the static best response to q, because this moves total output closer to the monopoly output. b. Firm 1 chooses , LARGER than the static best response to Oc. Firm 1 chooses q, LARGER than the static best response to ₂ Odq, is a static best response to ₂ because this moves total output closer to the monopoly output because this results in a smaller q. 2
Two multinational 3. Dynamic Games of Industrial Organisation companies produce the same good. In the first period, firm 1 sells its prod- uct as a monopolist in Paris. In the second period, firm1 competes with firm 2 in Berlin as a Cournot duopolist. There is no discounting between the two pe- riods. Firm 1 produces quantity xp
Ma1. Suppose that the market demand is Q=80−Pand the marginal cost is $20. Suppose two identical firms are selling the same product in the market. 1.Calculate the market price and the output and profit of each firm if they collude and act as a monopoly. 2.Suppose that now firm 1 decides to break the collusion and cheats. Calculate the market price, and each firm’s output and profit after cheating.
a. They compete in quantities with each other (Cournot-Nash equilibrium). b. They collude as though they are all plants of the same single multi-plant monopoly. c. B and C act as two plants of a single multi-plant monopoly “B+C”, which competes in quantities (Cournot competition) against A.
1) A monopoly faces a demand curve P(Q) = 120 – 2Q, and has a marginal cost of 60. a. What is profit-maximizing level of output? What is the profit-maximizing price? How much profit the firm will make? b. Assume that a second firm enters the market. The new firm has an identical cost function. If the two firms enter in a Cournot competition, what will be the price in equilibrium? How much will each firm produce in equilibrium? How much profit will each firm make? c. If, instead, the two firms compete in a Stackelberg game (assume the incumbent firm is the leader), what will be the price in equilibrium? How much each firm will produce in equilibrium? How much profit will each firm make? d. Now assume the follower has to pay a fixed cost, f =100 if q>0. Does it change the follower's decision? Assume again they are playing a Stackelberg game.? e. The leader knows that the follower has to pay the fixed cost and decides produce one third more than the quantity found in part c). Does it…
Which of the following is a shortcoming of concentration ratios as measures of monopoly power? O The data are for international products. O They only show the dispersion of size among the top four firms. O They do not account for interindustry competition. O They do not pertain to the nation as a whole. b. Suppose that the five firms in industry A have annual sales of 30, 30, 20, 10, and 10 percent of total industry sales. For the five firms in industry B, the figures are 60, 25, 5, 5, and 5 percent. Calculate the Herfindahl index for each industry and compare their likely competitiveness. es Herfindahl index for industry A = Herfindahl index for industry B = vthan industry B. Your comparison of their likely competitiveness: Industry A will be (Click to select) (Click to select) more competitive less competitive
Sam's Skates is an oligopoly and wants to maximize individual profits. Consequently, Sam's Skates will seek a profit-maximizing rate equal to = OTR TC for the total market. OP MC for the competitive firm. = O AR AC for each firm. MR = MC, where a monopoly would produce.
1. which compete in quantities (Cournot -Nash equilibrium = C) 2. which compete in quantities with the first firm (the Leader) choosing the output first (Stackelberg competition = S). 3. which collude and choose quantities in order to maximize the joint profits (behave like two plants of a multiplant monopoly = M).
In a market with a Duopoly, if Market Demand is P=300-Q find the Cournot reaction curves and the Cournot Quantity solutions then deduce the Price in the case where Marginal Costs curves for either of the Duopoly firms is MC1=q1+30 and MC2=q2+30. Compare your results to the case where a Monopolist that has a MC=Q+30 replaces the Duopoly. What are the Monopoly Quantity and Price? Which quantities are bigger, Cournot or Monopoly? What is the Consumer Surplus in both cases? Set-up the Oligopoly model in a game theoretical prisoner’s dilemma framework. Explain briefly the strategies and how you reach the Nash Equilibrium.
9.17. Number of competitors. Consider an n firm homogeneous-good oligopoly with constant marginal cost, the same for all firms. Let d ̄ be the minimum value of the dis- count factor such that it is possible to sustain monopoly prices in a collusive agreement. Show that d ̄ is decreasing in n. Interpret the result.
QUESTION 7 Price (dollars per ride) 16 H 2000 13 12 11 10 9 8 HE 0 40 80 In the scenario above, the market is a natural duopoly. ATC 120 160 200 Quantity (rides per day) In the figure, D is the demand curve for taxi rides in a town, and ATC is the average total cost curve of a taxi company. D monopolistically competitive. a natural oligopoly with three firms. a natural monopoly.
(a)Suppose that the two firms collude and set prices to maximize their joint profits instead of playing the Nash equilibrium. Suppose that the locations are symmetrically locates at a and 1−a. What prices would the firm set if it acts like a monopolist ? (b) If the firm colludes, where will it locate its two establishments?