Consider an industry with four competitors whosimultaneously set output levels (Cournotmodel).Market demand is given by Q = 50-P4. Firms 1 and 2 have a cost function given by C= 120 + 30q.Firms 3 and4 have a cost function given by C =80 + 50q.%3D%3D(a) Determine the equilibrium market shares ofeach firm. Determine the value of theconcentrationindex HHI.(b) Suppose that firms 1 and 4 merge, formingFirm 1&4; and that the marginal cost of thenewly formed firm is equal to c1&4 = c1 = 30.Determine the new equilibrium market shares%3Dof each firm. Determine the new value of theconcentration index H.

The purpose of this question is to be Cournot model, each firm chooses its output level based on its…

Consider an industry with four competitors who simultaneously set output levels (Cournot model). Market demand is given by Q = 50-P 4. Firms 1 and 2 have a cost function given by C = 120 + 30q. Firms 3 and 4 have a cost function given by C = 80 + 50g. (a) Determine the equilibrium market shares of Si.. S LL

Consider an industry with four competitors who simultaneously set output levels (Cournot model). Market demand is given by Q = 50-P 4. Firms 1 and 2 have a cost function given by C = 120 + 30q. Firms 3 and 4 have a cost function given by C = 80 + 50g. (a) Determine the equilibrium market shares of Si.. S LL

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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wo firms A and B produce an identical product (Note: Industry Output = Q). The firms have to decide how much output qA and qB (Note: qA = Firm A Output; qB = Firm B Output) they must produce since they are the only two firms in the industry that manufacture this product. Their marginal cost (MC) is equal to their average cost (AC) and it is constant at MC = AC = X, for both firms. Market demand is given as Q = Y – 2P (where P = price and Q = quantity). Select any value for X between [21 – 69] and any value for Y between [501 – 999]. Using this information, calculate the Industry Price, Industry Output, Industry Profit, Consumer Surplus and Deadweight Loss under each of the following models: (a) Cournot Model error_outlineHomework solutions you need when you need them. Subscribe now.arrow_forward Question Two firms A and B produce an identical product (Note: Industry Output = Q). The firms have to decide how much output qA and qB (Note: qA =…
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= Suppose the inverse demand for a particular good is given by P 1200 12Q. Furthermore, there are only two firms, A and B. Firm A's marginal cost is a constant $25, and Firm B's marginal cost is a constant $20. Assume these two firms engage in Stackelberg competition, where Firm A moves first. If we assume that the firm with the lowest costs could supply the entire market, then the deadweight loss due to the market power these two firms exert through Stackelberg competition equals $_____. [Round your answer to two decimals.]
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In the short run, each of the 5 firms in some industry faces a capacity constraint and constant marginal and average costs until this capacity is reached (see the table below). Marginal Cost = Average Cost Maximum output Firm 1 $50 100 Firm 2 $60 20 Firm 3 $67 50 Firm 4 $80 200 Firm 5 $92 70 Assuming that no firm has monopoly (pricing) power, what will be the quantity supplied at a price of (a) $40 (b) $55 (c) $73 (d) $99
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