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Consider the Cournot-Stackelberg competing islands of Penang and Grenada discussed in the previous problem. (The inverse demand function remains P-100-qp - 9G-) a. Suppose Grenada's cost of production falls to $16, while Penang's remains at $20. Grenada's function will now be ga = 42-0.5qp, and Penang's will be qp = 40-0.5gg. Specify the two islands' equilibrium output levels. 9G= 19 9G = Incorrect qp= 38 b. Suppose Grenada's cost of production remains at $20, while Penang's falls to $16. Grenada's reaction function will now 40-0.5qp, and Penang's will be qp = be qa = 42-0.5gg. Specify the two islands' equilibrium output levels. 19 qp= Incorrect. 23 c. Grenada has a first-mover advantage in part a but not part b, since in the latter case, the cost advantage of Penang overwhelms Grenada's first-mover advantage. True False

Consider the Cournot-Stackelberg competing islands of Penang and Grenada discussed in the previous problem. (The inverse demand function remains P-100-qp - 9G-) a. Suppose Grenada's cost of production falls to $16, while Penang's remains at $20. Grenada's function will now be ga = 42-0.5qp, and Penang's will be qp = 40-0.5gg. Specify the two islands' equilibrium output levels. 9G= 19 9G = Incorrect qp= 38 b. Suppose Grenada's cost of production remains at $20, while Penang's falls to $16. Grenada's reaction function will now 40-0.5qp, and Penang's will be qp = be qa = 42-0.5gg. Specify the two islands' equilibrium output levels. 19 qp= Incorrect. 23 c. Grenada has a first-mover advantage in part a but not part b, since in the latter case, the cost advantage of Penang overwhelms Grenada's first-mover advantage. True False

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Imperfect Competition - End of Chapter Problem Consider the Cournot-Stackelberg competing islands of Penang and Grenada discussed in the previous problem. (The inverse demand function remains P = 100 - qp - 9G.) a. Suppose Grenada's cost of production falls to $16, while Penang's remains at $20. Grenada's function will now be qe = 42-0.5qp, and Penang's will be qp = 40-0.5gG. Specify the two islands' equilibrium output levels. 9G= 19 9G= Incorrect 9p= 38 b. Suppose Grenada's cost of production remains at $20, while Penang's falls to $16. Grenada's reaction function will now be qG = 40-0.5qp, and Penang's will be qp = 42 -0.5gG. Specify the two islands' equilibrium output levels. 19 9p= Incorrect 23 c. Grenada has a first-mover advantage in part a but not part b, since in the latter case, the cost advantage of Penang overwhelms Grenada's first-mover advantage. True False
Transcribed Image Text:Imperfect Competition - End of Chapter Problem Consider the Cournot-Stackelberg competing islands of Penang and Grenada discussed in the previous problem. (The inverse demand function remains P = 100 - qp - 9G.) a. Suppose Grenada's cost of production falls to $16, while Penang's remains at $20. Grenada's function will now be qe = 42-0.5qp, and Penang's will be qp = 40-0.5gG. Specify the two islands' equilibrium output levels. 9G= 19 9G= Incorrect 9p= 38 b. Suppose Grenada's cost of production remains at $20, while Penang's falls to $16. Grenada's reaction function will now be qG = 40-0.5qp, and Penang's will be qp = 42 -0.5gG. Specify the two islands' equilibrium output levels. 19 9p= Incorrect 23 c. Grenada has a first-mover advantage in part a but not part b, since in the latter case, the cost advantage of Penang overwhelms Grenada's first-mover advantage. True False
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