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? 3. The following diagram illustrates the reaction functions and isoprofit curves for a homo-geneous-product duopoly in which each firm produces at constant marginal cost. (LO1,LO2, LO3)a. If your rival produces 50 units of output, what is your optimal level of output?b. In equilibrium, how much will each firm produce in a Cournot oligopoly?c. In equilibrium, what is the output of the leader and follower in a Stackelbergoligopoly?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 firmduces half of the monopoly output.pro-325300275250225200175150125100755025255075100 125 150 175 200 225 250 275 300(1) What is your output under the collusive arrangement?(2) What is your optimal output if you believe your rival will live up to theagreement?

d) in MONOPOLY, if q2 is zero Firm 1 is MONOPOLY, then q1 = 150, from BR1, where it hits x axis E)…

Answered: d. How much output would be produced if…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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?

3. The following diagram illustrates the reaction functions and isoprofit curves for a homo-
geneous-product duopoly in which each firm produces at constant marginal cost. (LO1,
LO2, LO3)
a. If your rival produces 50 units of output, what is your optimal level of output?
b. In equilibrium, how much will each firm produce in a Cournot oligopoly?
c. In equilibrium, what is the output of the leader and follower in a Stackelberg
oligopoly?
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
duces half of the monopoly output.
pro-
325
300
275
250
225
200
175
150
125
100
75
50
25
25
50
75
100 125 150 175 200 225 250 275 300
(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?

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