In a market that operates under quantity competition there are 9 firms (Cournot oligopoly). The inverse demand function is P = 3202 Q. All firms share the same cost structure, that is given by C(qi) = 200 + 20 qi + 5 qi2. Define the profit maximization problem that every firm faces and solve for the best response function. Use this (or the first order condition directly) to answer the following: The Nash Equilibrium quantity produced by each firm q* is: The Nash Equilibrium price P* is: The Lerner Index is:

In a market that operates under quantity competition there are 9 firms (Cournot oligopoly). The inverse demand function is P = 3202 Q. All firms share the same cost structure, that is given by C(qi) = 200 + 20 qi + 5 qi2. Define the profit maximization problem that every firm faces and solve for the best response function. Use this (or the first order condition directly) to answer the following: The Nash Equilibrium quantity produced by each firm q* is: The Nash Equilibrium price P* is: The Lerner Index is:

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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In a market that operates under quantity competition there are 9 firms (Cournot oligopoly). The inverse demand function
is P = 320 - 2 Q. All firms share the same cost structure, that is given by C(qi) = 200 + 20 qi + 5 qi2. Define the profit
maximization problem that every firm faces and solve for the best response function. Use this (or the first order condition
directly) to answer the following:
The Nash Equilibrium quantity produced by each firm q* is:
The Nash Equilibrium price P* is:
The Lerner Index is:

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Step 1: Defining Oligopoly

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Step 2: Defining the profit-maximizing problem and writing the best response function.

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Step 3: Solving the response function and finding the equilibrium quantity and price.

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Step 4: Finding the Lerner Index

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