d. How much output would be produced if the market were monopolized? e. Suppose you and your rival agree to a collusive arrangement in which each firm produces half of the monopoly output. (1) What is your output under the collusive arrangement? (2) What is your optimal output if you believe your rival will live up to the agreement?

The Bertrand model of oligopoly reveals that: capacity constraints are not important in determining market performance. perfectly competitive prices can arise in markets with only a few firms. changes in marginal cost do not affect prices. All of the statements associated with this question are true. QUESTION 2 If firms are in Cournot equilibrium: each firm could increase profits by unilaterally increasing output. each firm could increase profits by unilaterally decreasing output. firms could increase profits by jointly increasing output. firms could increase profits by jointly reducing output. OOO

The firms in a duopoly produce differentiated products. The inverse demand for Firm 1 is The inverse demand for Firm 2 is P₂=70-02-0.501- Each firm has a marginal cost of m=$1 per unit. Solve for the Nash-Coumot equilibrium quantities. The Cournot equilibrium quantities are and P₁-52-91-0.592 (Enter your responses rounded to two decimal places.) 4₁ = units 92 units. possibi

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Suppose that the market demand for facial mud packs are given as follows: P = 2,200 – Q. Mud packs can be produced at no cost. Determine the level of output that would be produced by each firm in a Cournot duopoly in the long run. Calculate the price charged for mud packs. Show all calculations. [9]

Consider a Cournot oligopoly with n = 2 firms. Firm 1 cost function is TC₁ (9₁) = 20 + 12q₁ + q², while firm 2 cost function is TC₂ (9₂) = 50 +8q2 + q2 . The total market demand is P(Q) = 50 — 2Q, where Q is the total quantity produced by all (active) firms in the industry. a- Compute the Cournot equilibrium total quantity, price, quantity for each firm, and profit for each firm. Which firm is making higher profits? b- Consider the situation in which a third firm (firm 3) enters the market. What is the total equilibrium quantity, price, quantity and profit for each firm if TC3 = TC₁? [hint: q₁ and q3 will be the same, since 1 and 3 are identical] c- How would your answer at point b change if instead TC3 = TC₂? Would consumers prefer firm 3 to enter with the total cost of firm 1 or firm 2? d- What would be the highest one-time cost that firm 3 would be willing to pay to enter the market and then compete in a Cournot game with total cost equal to firm 1?

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A homogenous-good duopoly faces a market demand function of P= 14 - Q, where Q = Q1 + Q2. Both firms have the same structure of total cost functions as follows: TC =2 + 2Q1, where Q, is Firm 1's output level. TC2 = 2 + 2Q2, where Q2 is Firm 2's output level. Suppose that Firm 1 sets its output level first and then Firm 2, after observing Firm 1's output level, makes its output decision. What is the market price (P*) at a Stackelberg equilibrium? P* = $10. %3D P* = $8. O P* = $6. P* $5. None of the above.

Q4 Industries X (production of plastic sheds in Canada) and Y (production of cardboard in Canada) both have four-firm concentration ratios of 16 percent, but the Herfindahl index for X is 102, while that for Y is 95. These data suggest Multiple Choice   both industries are strongly oligopolistic.   both industries are experiencing diminishing returns.   greater market power in Y than in X.   greater market power in X than in Y.   that price competition is stronger in X than in Y.

For a Cournot oligopoly model with n firms facing constant marginal costs c, and market demand P = 1 - Q. where Q is the total quantity demanded in the market, the equilibrium quantity for each firm will be O (1-c)/(n+1) O (1+c)/(n+1) O (1+cn)/(n+1) O (1-cn)/(n+1)