Answered: Determine the equilibrium output…

Business

Economics

Determine the equilibrium output levels, market price, and profits for both firms, assuming Firm A is the leader

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter24: Monopolistic Competition, Oligopoly, And Game Theory

Section: Chapter Questions

Problem 9QP

See similar textbooks

Related questions

Q: Consider a Cournot Oligopoly. One firm has costs C1(Q1) = 12Q1 while the other firm’s cost function…

A: The Cournot oligopoly model is the most famous model of the blemished contest. In the Cournot model,…

Q: Consider a Bertrand oligopoly consisting of four firms that produce an identical product at a…

Q: Consider a noncollusive duopoly model with both firms supplying bottled drinking water. The marginal…

A: A noncollusive duopoly is a market structure in which there are only two firms that dominate the…

Q: Consider a Cournot oligopoly with two firms, where the demand curves are given by P, = 100- Q1 - 2Q2…

A: Given, Cournot oligopoly demand functions of two firms : Firm 1 : P1= 100 - Q1 - 2Q2 Firm 2 : P2=…

Q: Consider a Bertrand oligopoly consisting of four firms that produce an identical product at a…

A: a) In the Bertrand model, the equilibrium level is at the point where, P = MC Price = 800 – 4Q MC =…

Q: Problem 1: In a homogenous product oligopoly there are two firms, Firm A and Firm B. The inverse…

A: please find the answer below.

Q: Consider a Cournot duopoly with the following inverse demand function: P = 100 - 2Q1 - 2Q2. The…

A: Inverse Demand Function: Firm's identical marginal cost: Where i = 1, 2

Q: Two firms sell a standardized product in a Cournot oligopoly. The inverse demand for the market is…

A: (Q) Two firms sell a standardized product in a Cournot oligopoly. The inverse demand for the market…

Q: Two firms compete in a single market (duopoly) with demand given by Qp=60-P. The two firms have…

A: Given information: Qd = 60 - P C(q) = 2q In the Bertrand model, firms competes on the basis of…

Q: Two firms operate in a Cournot Duopoly with an inverse market demand function: P = 180 – 3Q, where Q…

A: Cournot duopoly

Q: Two identical firms currently serve a market. Each has a cost function of C(q) = 30q. Market demand…

A: Demand function : P = 80 − 0.01Q Cost for each firm : C(q) = 30q Cost function of merged identity…

Q: Consider a market that is a Bertrand oligopoly with 5 firms in the market. Each of these firms…

A: All the firms in the market operate with the objective of profit-maximization and at the…

Q: Three firms, A, B and C engage in Bertrand price competition in a market with inverse demand given…

A: A Nash equilibrium is a concept in game theory that represents a stable outcome of a strategic…

Q: Consider a market for crude oil production. There are two firms in the market. The marginal cost of…

A: Answer: Given, Inverse demand curve: PQ=200-QWhere,Q=q1+q2 Marginal cost of firm 1:MC1=20Marginal…

Q: In a Cournot duopoly model, the market demand curve is given by P = 100 - yI -y where y, is the…

A: Market Demand : P=100-y1-y2 Cost of firm 1: 75+8y1 Cost of firm 2: 100+12y2 Firm1 TR1=Py1…

Q: Suppose oil production in the Gulf of Mexico was a symmetric horizontal oligopoly in Cournot…

A: Given demand function Q=12000-20P MC=$50

Q: Two firms who make identical products engage in Cournot competition. The inverse market demand curve…

A: Market inverse demand equatiion: P(Q)=60−10Q.Q is quantity and there are two firms in this market.…

Q: Consider a Cournot duopoly. The market demand function is P = 180 – 2(q₂ + q₂), where P is the…

A: Ans. ) Given the question, of cournot duopoly. It is model where firm producing identical good…

Q: Consider a market that is a Bertrand oligopoly with 5 firms in the market. Each of these firms…

A: The markets have various characteristics, which differentiates each market from each other. The…

Q: Consider a Duopoly model, in which two firms decide a quantity sequentially. For the convenience,…

A: The Stackelberg model is a type of duopoly in which one firm, called the leader, sets its output…

Q: Question 22 Consider the following Cournot duopoly. Both firms produce a homogenous good. The demand…

A: We have duopoly model with asymmetric information about the marginal cost of firm 2.

Q: Consider the following Cournot duopoly. Both firms produce a homogenous good. The demand function is…

A: A duopoly is a form of market where there are two sellers and many buyers. The price in this market…

Q: Consider a duopoly where firms compete in prices and firms do not have any capacity constraints.…

A: GIVEN Consider a duopoly where firms compete in prices and firms do not have any capacity…

Q: Consider a Cournot duopoly with the following inverse demand function: P = 4,000 – 4Q1 - 4Q2. The…

A: The type of market structure in which an exactly same product is produced and sold by two producers…

Q: Consider two price-setting oligopolies supplying consumers in a certain region of a country. Firm 1…

Q: Two firms A and B compete in a Cournot duopoly environment. The (inverse) market demand curve is…

A: Answer: Given, Inverse market demand function: P=88-0.5QWhere,Q=QA+QB Total costs: TCA=8QATCB=8QB…

Q: Assume a duopoly (two firms: A and B) is facing a common demand equation but different cost…

A: In the production process, the conditions and fluctuations that happen between demand and also the…

Q: Two firms, A and B, face an inverse market demand function of P = 1200 - 4Q. Each firm has the same…

A: market demand function of P = 1200 - 4Q. where Q = qA+qB cost function Ci = 20qi.

Q: Consider an industry composed of only two firms, each producing an identical product. The two firms…

A: We have stackleberg competition between two firms and they both have identical costs.

Q: The diagram below shows the demand, marginal revenue, and marginal cost of a monopolist. 120- $ 110-…

A: Different market structures come in different forms. We shall talk about monopolies and ideal…

Q: onsider a Bertrand oligopoly where two firms (Firms 1 and 2) sell goods that are imperfect…

A: Given Market demands function for q!: Since !=1 and "=2So q1=1200-32p1+32p2 ......(1)and…

Q: Suppose we have a duopoly with Firm 1 and Firm 2 and the following inverse demand function: P = 100…

A: In cournot duopoly , The quantity produced by each firm is determined by the intersection of…

Q: Consider a Cournot duopoly. The market demand function is P = 112-1(q1+q2), where P is the market…

A: The oligopoly model where the competing firm produces same good and try to maximize their profits by…

Q: Two identical firms compete as a Cournot duopoly. The inverse market demand they face is P-128 - 4Q.…

A: The firm will produce where the marginal revenue is equal to marginal cost to maximize its profit.…

Q: Consider a Duopoly model, in which two firms decide a quantity sequentially. For the convenience,…

A: Given that the market contains two firms in which firm 1 is a dominant firm and firm 2 is the…

Question

Two firms, A and B, compete in a Stackelberg duopoly with constant marginal costs of $10 for Firm A and $12 for Firm B. The market demand is given by Q = 100 - P. Determine the equilibrium output levels, market price, and profits for both firms, assuming Firm A is the leader

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Equilibrium price level

VIEW

Step 2: Profit of the firms

VIEW

Solution

VIEW

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

The kinked oligopoly demand curve is a result of the assumption by an oligopolist that a. price increases will be matched, but price reductions will not. b. price increases will not be matched, but price reductions will. c. both price increases and price reductions will be matched. d. neither price increases nor price reductions will be matched.
Consider a duopoly where firms compete in prices and firms do not have any capacity constraints. Market demand is P(Q)=45-4Q, and each firm faces a marginal cost of $9 per unit. How much is each firm's total variable cost if firms equally divide the market at Nash equilibrium?
Suppose oil production in the Gulf of Mexico was a symmetric horizontal oligopoly in Cournot competition. Assume there are two producers, each with a constant marginal cost of production of $50 per barrel. Let the demand function for oil in the region be D(p) = 12000 – 20p, where demand is measured in barrels per day. (You will need to calculate inverse demand from demand before moving on). What would the perfectly competitive equilibrium price and quantity be? What would be the consumer surplus and producer surplus? Draw each firm’s residual inverse demand curve. Calculate the Cournot-Nash equilibrium price and quantity. What is the total consumer surplus, total producer surplus across the two firms, and deadweight loss?
Two firms operate in a Cournot Duopoly with an inverse market demand function: P = 180 – 3Q, where Q = q1 + q2. Firm 1 has a total cost structure; TC1 = 50 + 2q1 + 2q1 2 and firm 2 had a total cost structure: TC2 = 100 + 3q2 + 3q2 2 . Answer the following questions: a. If both firms wish to compete, what is the optimal quantity for each firm (qi) and the market price? b. What are the profits for each firm from the strategy in part a? c. If both firms choose to collude and not directly compete, what is the new price, quantity, and profits for each firm?
Consider a market that is a Bertrand oligopoly with 5 firms in the market. Each of these firms produce an identical product and each have the same cost function of C(Q) = 80Q. The inverse market demand for this product is P = 2480 – 2Q. What is the equilibrium market price?
Assume a duopoly (two firms: A and B) is facing a common demand equation but different cost equations. Q = 300-20P TCA = 300+20Q+2Q2 TCB = 250+10Q+3Q2 Show the profit maximizing quantity (Q) to each firm (A and B) and the corresponding prices (PA and PB). How would the two firms ultimately resolve price competition?
Consider a Duopoly model, in which two firms decide a quantity sequentially. For the convenience, let's say Firm 1 is a dominant firm and Firm 2 is a follower. The market demand is given by P=110 - 5Q, where Q is the total output (i.e., Q=Q1+Q2). Each firm has an identical cost function, TCi=7Qi, i=1, 2. Each firm maximizes its profit by choosing the quantity. In this Stackelberg equilibrium, Firm 1 will sell __________ units.
Consider a Duopoly model, in which two firms decide a quantity sequentially. For the convenience, let's say Firm 1 is a dominant firm and Firm 2 is a follower. The market demand is given by P=110 - 5Q, where Q is the total output (i.e., Q=Q1+Q2). Each firm has an identical cost function, TCi=7Qi, i=1, 2. Each firm maximizes its profit by choosing the quantity. In this Stackelberg equilibrium, Firm 1 will sell how many units.
Consider a market that is a Bertrand oligopoly with 5 firms in the market. Each of these firms produce an identical product and each have the same cost function of C(Q) = 80Q. The inverse market demand for this product is P = 2480 – 2Q. How much does EACH firm produce at the equilibrium price?
Two firms, A and B, face an inverse market demand function of P = 1200 - 4Q. Each firm has the same cost function Ci = 20qi. Assume the A and B are Stackelberg competitors, and that A is the leader. Derive from profit functions the equilibrium prices, quantities, and profits for A and B. How does the methodology for solving the Stackelberg problem differ from the method for solving the Cournot problem? Why?
The diagram below shows the demand, marginal revenue, and marginal cost of a monopolist. 120 110- 100- 90- A 80- 70 60- 50- 40- 30- 20 10 O @_ 0 1 2 3 16 4 Profit-maximizing output: Profit-maximizing price: $ 5 7 units MR 6 MC T 7 8 a. What price and output would prevail if this firm's product was sold by price-taking firms in a perfectly competitive market? 9 Quantity D T 10 11 (11, 0) 14 15 b. Determine the profit-maximizing output and price for the monoplist. Price: $ 68 Output: 5 units c. Calculate the deadweight loss of this monopoly.
Consider a Cournot duopoly. The market demand function is P = 112-1(q1 + q2), where P is the market price, q1 is the output produced by Firm 1 and q2 is the output produced by Firm 2. The two firms have a constant marginal cost c = 17. What is Firm 2's profit ? Round your answer to the nearest integer (e.g. 50)