In the aeronautical market, Boing and Airbus constitute a duopoly in the production of large airplanes. The American firm has the following cost structure C(qa) = 20 + 3qa + qå, and the European firm, C(qe) 150 – P, answer the following questions. = 50 + qe + q². If the market demand for large airplanes is given by Qp = qa + qe = a) Interpret the cost structures of both firms b) What would be the equilibrium (quantity, price, and profit) if firms compete by quantity as in Cournot and interpret your answer. c) If they decide to form a cartel, what are the new quantities, prices, and profits? Interpret your answer using the Game Theory insights.

In the aeronautical market, Boing and Airbus constitute a duopoly in the production of large airplanes. The American firm has the following cost structure C(qa) = 20 + 3qa + qå, and the European firm, C(qe) 150 – P, answer the following questions. = 50 + qe + q². If the market demand for large airplanes is given by Qp = qa + qe = a) Interpret the cost structures of both firms b) What would be the equilibrium (quantity, price, and profit) if firms compete by quantity as in Cournot and interpret your answer. c) If they decide to form a cartel, what are the new quantities, prices, and profits? Interpret your answer using the Game Theory insights.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Glyde Air Fresheners is the dominant firm in the solid room aromatizer industry, which has a total market demand given by Q = 80 - 2P. Glyde has competition from a fringe of four small firms that produce where their individual marginal costs equal the market price. The fringe firms each have total costs given by TC; = 10Q; + 2Q²;. If Glyde's total costs are given by TCG = 100 + 6QG, what are the total profits of the fringe firms?
The cost function for producing ethanol from municipal waste (wastehol) is 1000+10q2where q is in millions/gallons per year. The demand for wastehol is currently perfectly inelastic at 5 million gallons per year. Assume that producers of wastehol are perfectly competitive. California is deciding whether to convert all wastehol producers into a regulated wastehol utility. If wastehol is a regulated monopoly utility with the cost function above, what price would regulators set as the price of wastehol? Now assume that the wasteahol market has boomed and demand has grown to 20 (again million gallons per year). Now what is the regulated price of wastehol? You are the wastehol producer and are trying to decide whther to lobby for deregulating the wastehol industry. If wastehol were deregulated, if demand remains 20, what would the perfectly competitive price be? If you are a wastehol customer, you would prefer a deregulated industry if demand were 20? True/False?
**Practice**
Give only typing answer with explanation and conclusion The market demand for a monopoly firm is estimated to be: Qd = 100,000 - 500P + 2M + 500PR where Qd is quantity demanded, P is price, M is income, and PR is the price of a related good. The manager has forecasted the values of M and PR will be $50,000 and $20, respectively, in 2016. The average variable cost function is estimated to be AVC = 520 - 0.03Q + 0.000001Q2 Total fixed cost in 2016 is expected to be $4 million. The profit-maximizing price for 2016 is $80. $100. $260. $520. $560.
am. 114.
Katie's Quilts is a small retailer of quilts and other bed linen products. Katie currently purchases quilts from a large producer for $100 each and sells them in her store at a price that does not change with the number of quilts that she sells. Katie is considering vertically integrating by making her own quilts. If the fixed cost of vertically integrating is $25,000 and she can produce quilts at Homework: Homework 7 (Lecture 6) Save Score: 0 of 1 pt 6 of 10 (8 complete) HW Score: 80%, 8 of 10 pts Text Question 4.2 Ques $50 per quilt, her total cost of producing quilts, q, herself is C=25,000+50q. How many quilts does Katie need to sell for vertical integration to be a profitable decision? For vertical integration to be profitable, Katie must sell at least nothing quilts. (Enter your response rounded to the nearest whole number.)
i need in words not handwritten solution please
Suppose the iceberg lettuce industry is a Cournot duopoly with two firms: Xtra Leafy (a) and Yummy Farms (y). Xtra Leafy produces q units of output and Yummy Farms produces qy units of output. Aggregate market output is Q = x + y. The (inverse) market demand schedule is: p = 176 - 2Q Both firms have identical cost structures: MC = MC₁ = ATC₂ = ATC₁ = $12 Find Xtra Leafy's Cournot reaction function of the form: 9x = a + bay Where "a" is the reaction function's intercept and "b" is its slope. Note: Please review the formatting instructions above. If any value is negative, be sure to include its negative sign. a. a= b. b = Hint: One of your answers will be negative. Think about why.
Firm X is going to apply a 2nd degree price discrimination. They plan to charge P1 for the first units and P2 for the subsequent units. The inverse market demand curve is P=100 – 2q, and the total cost function is TC = 10q + 100. Answer the following questions: %3D - 5. the prices (P1 & P2) the firm is going to charge after applying 2nd degree price discrimination are: O P1=70 and P2=40 O P1=40 and P2=70 O P1=20 and P2-40 O P1=60 and P2-30
Please answer the blank questions
Only typed answer
Problem 2: Presently, APlus Transport and Big Movers are the only suppliers of services that haul heavy construction equipment between jobs within the Midwest. No other suppliers have the equipment necessary to perform the service. The market inverse demand for these hauling services is given below. P = 4,030-4Q where P is price per trip and Q is total number of trips per year. For simplicity, also assume that neither firm has fixed costs. From company records, you are given the following variable cost function for each firm: a. C. TVC = 300 TVCB = 80QB b. Calculate the Cournot market equilibrium price-output solutions for each firm including their respective profits. d. Assume these two competitors operate as a two-firm Cournot duopoly. Find the reaction functions for each firm. Suppose Big Movers shuts down operations so that APlus now has a monopoly in this market. What is the price, quantity, and profits for APlus after this change? Summarize the results of your findings over the…