In the Cournot oliogopoly model, firms compete by setting quantities. In class we noted that as the number of firms in the market grows very large, the outcome looks increasingly like what other model we studied? Provide intuition for your answer.

In the Cournot oliogopoly model, firms compete by setting quantities. In class we noted that as the number of firms in the market grows very large, the outcome looks increasingly like what other model we studied? Provide intuition for your answer.

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter10: Monopolistic Competition And Oligoply

Section: Chapter Questions

Problem 20SQ: The kinked oligopoly demand curve is a result of the assumption by an oligopolist that a. price...

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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.
A duopoly faces an inverse market demand of: p= 390 - 341 - 392. You are told that firm 1 is the leader and firm 2 is the follower. Otherwise the firms are identical, each with a constant marginal cost of $90. What oligopoly model will you use to analyze this market? The Stackelberg model At the Nash equilibrium, firm 1 will produce 60.0 units. (Round your answer to one decimal place.) At the Nash equilibrium, firm 2 will produce 30.0 units. (Round your answer to one decimal place.)
One of the predictions of the oligopoly model is that: non-price competition is uncommon and price-cutting competition among rivals is common. prices tend to remain relatively stable despite short-run fluctuations in market demand. the firms' costs of production (raw material, labor, advertising) remain constant over time. only one buyer (monopsony) will result in the long run. MacBook Pro G Search or type URL * 23 3 41 5 6 7 8. Y U W E tab G s lock
Consider a noncollusive duopoly model with both firms supplying bottled drinking water. The marginal cost for each firm is $1.50. The market demand is shown by the figure on the right. Let us assume that the two firms supplying bottled drinking water are Firm A and Firm B. The price charged by Firm A is denoted as PA and the price charged by Firm B is denoted as PB- Find the demand functions for each of the firms. If PA S$5, then demand for Firm A's bottled drinking water is: thousand if PA PB thousand if PA = PB thousand if PA > PB If PB ≤ $5, then demand for Firm B's bottled drinking water is: thousand if PB PA Price 10- 9- 8- 7- 6- 5- 4- 3- 2- 1- 0- 0 0.5 1 Demand 2 2.5 3 3.5 1.5 Quantity (in thousands) 4 4.5
Suppose we have the "classic" Cournot duopoly model, with a linear demand curve P = a - bQ And two firms which are identical, each with total costs TC(q) = c + dq. (a) What is the market price in the Cournot equilibrium and what profit is earned by an individual firm?(b) Compare individual quantity, market quantity, market price, individual profits and consumer surplus ( show it in a graph) to the outcomes of this market were a monopoly. Comment on your results. Show all the steps of the calculation
The French economist Antoine Cournot developed an interesting model of competition in an oligopoly that now bears his name. In a Cournot oligopoly, all of the firms know that the total output from all firms will determine the price (based on the downward-sloping market demand curve), but they make independent and simultaneous decisions about how much output to produce. Cournot developed this model after observing how a spring water duopoly (two firms) behaved. So let’s look at a duopoly example.For each firm to decide how much to produce, it must make a guess about how much the other firm is going to produce. Also, the firms basically assume that once the other firm has decided how much to produce, it can’t really change its decision.Here’s an example. Suppose the market demand curve for gallons of fresh spring water looks like the one below and, to keep things simple, the marginal cost of spring water is zero. If Firm X believes that Firm Y is going to produce 100 gallons of spring…
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.
Joe and Rebecca are small-town ready-mix concrete duopolists. The market demand function is Qd = 10,000 – 100P, where P is the price of a cubic yard of concrete and Qd is the number of cubic yards demanded per year. Marginal cost is $25 per cubic yard. Suppose that Joe and Rebecca compete in quantities and competition in this market is described by Cournot model. What are Joe and Rebecca’s Nash equilibrium outputs? What is the resulting price? What do they each earn as profit? How does the price compare to the marginal cost? Joe and Rebecca are small-town ready-mix concrete duopolists. The market demand function is Qd = 10,000 – 100P, where P is the price of a cubic yard of concrete and Qd is the number of cubic yards demanded per year. Marginal cost is $25 per cubic yard. Suppose that Joe and Rebecca compete in quantities and competition in this market is described by Cournot model. What are Joe and Rebecca’s Nash equilibrium outputs? What is the resulting price? What do they each…
Now suppose United Air Lines enters the Atlanta market. Consider this to be an oligopoly market with two firms that behave in a Cournot Model fashion. The market demand schedule is cost schedule for both firms are: P = 400 - .5*Q, and firm level cost for both firms is MC=AC=Scomp=100. What is the Cournot Market Price? Fill in the blank below with your answer. Your answer should be entered as a whole number such as 102. If you get 102.56, do not round or enter any decimal places, just enter 102 and nothing else for the answer.
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Economics Reference the following information about the market demand function for questions 1 to 15. These questions are on different types of market structures – monopoly, perfect competition, Cournot oligopoly market, and the Stackelberg oligopoly market. The market demand function is given the following equation: P = 2000 – Q where Q is the industry’s output level. Suppose initially this market is served by a single firm. Let the total cost function of this firm be given the function C(Q) = 200Q. The firm’s marginal cost of production (MC) is equal to the firm’s average cost (AC): MC = AC = 200. Now suppose the two firms engage in Stackelberg market competition. Assume firm 1 is the leader (first-mover) and firm 2 is the follower firm (second-mover). Marginal profit function of Stackelberg leader: 900−Q1 QUESTION 14: What will be the market price in this Stackelberg model? Group of answer choices $480 $650 $720 $900 QUESTION 15: Can you calculate the profit earned by the…