p= 00 -a. n firm has a marginal cost of $15 per unit. at is the Cournot equilibrium? Cournot equilibrium quantities for Firm 1 (9,) and Firm 2 (a2) are units units. (Enter numeric responses using real numbers rounded to two decimal places Cournot equilibrium price is at is the Stackelberg equilibrium when Firm 1 moves first? Stackelberg equilibrium quantities when Firm 1 moves first are units 2 -O units. - Stackelberg equilibrium price is

p= 00 -a. n firm has a marginal cost of $15 per unit. at is the Cournot equilibrium? Cournot equilibrium quantities for Firm 1 (9,) and Firm 2 (a2) are units units. (Enter numeric responses using real numbers rounded to two decimal places Cournot equilibrium price is at is the Stackelberg equilibrium when Firm 1 moves first? Stackelberg equilibrium quantities when Firm 1 moves first are units 2 -O units. - Stackelberg equilibrium price is

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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You are a pricing analyst for QuantCrunch Corporation, a company that sells a statistical software package. To date, you only have one client. A recent internal study reveals that this client’s inverse demand for your software is P=1500-5Q and that it would cost you $1,000 per unit to install and maintain software at this client’s site. What is the profit that results from two-part pricing? (Hint: set the per-unit price for each unit of the software installed and maintained equal to marginal cost; and charge a fixed “licensing fee” that extracts all consumer surplus from the client)
4. )In a pure exchange economy with two goods, G and H, the two traders have Cobb- Douglas utility functions. Suppose that Tony's utility function is U, = G.H; and Margaret's utility function is Um= Gm(Hm)³. Between them, they own 100 units of G and 50 units of H. Solve for their contract curve. Continuing with question 4, determine p, the competitive price of G, where the price of H is normalized to equal one.
Question 3 Assume we have a market with only two companies in it, Company X and Company Y. Now suppose that both companies have to choose one of two potential strategies for pricing their products: setting a low price or setting a high price. The table below shows the expected profits for each company under each pricing scenario. Assume both companies are in competition with each other and seek to maximize their profits. Under these conditions, how much profit should we expect both companies to earn? Company Y Provide your answer below: High Price Low Price High Price Profit for Company Y: $12, 975,000 Profit for Company X: $12, 975,000 Profit for Company Y: $16, 218,000 Profit for Company X: $1,946, 000 Company X Low Price Profit for Company Y: $1,946, 000 Profit for Company X: $16, 218,000 Profit for Company Y: $6,487,000 Profit for Company X: $6,487,000
1 Consider two identical firms with a unit cost of production of $10 and a market demand of p= 60-y. (a) What is firm 1’s optimal output level as a function of firm 2’s output? (b) What is firm 2’s optimal output level as a function of firm 1’s output? (c) What is the Cournot equilibrium output level for these firms? (d) What is the Cournot equilibrium price level? Show your work step by step.
An economy with many consumers (Amy, Hao, ...), many producers, two goods (A and B) and two inputs (L and K) is in a competitive general equilibrium. Which of the following conditions are satisfied in this economy? (Select all that apply) The absolute value of the slope of PPF (with good A on the horizontal axis) is equal to MCA / MCB, the ratio of marginal costs of producing goods A and B, at any point on PPF MRSAB = PA / PB for all consumers For every possible redistribution of goods among the consumers, some of them will be better off and some of them will be worse off. MRS = MRT MRS MRTS PA = MCA and PB = MCB MUAmy = MUHao A = PA MRTS = PA / PB MUAmy A = MCA and MUAmy B = MCB MRTS between labour and capital is the same for all firms, whether producing good A or good B. the ratio of input marginal products must be equal to the ratio of input prices MRT = MRTS for all firms, whether producing good A or good B For every possible redistribution of inputs among the firms, the quantity…
cost function is c(y) An industry has two firms. Firm 1's cost function is c(y) = 3y + 200 and firm 2's 3y + 100. The demand curve for the output of this industry is a downward-sloping straight line. In a Cournot equilibrium, where both firms produce positive amounts of output: = The firm with higher fixed costs produces more. Both firms produce the same amount of output. There is less output than there would be if the firms colluded to maximize joint profits. It is not possible to tell because the demand function is not specified. The firm with lower fixed costs produces more.
cost function is c(y) An industry has two firms. Firm 1's cost function is c(y) = 3y + 200 and firm 2's 3y + 100. The demand curve for the output of this industry is a downward-sloping straight line. In a Cournot equilibrium, where both firms produce positive amounts of output: = The firm with higher fixed costs produces more. Both firms produce the same amount of output. There is less output than there would be if the firms colluded to maximize joint profits. It is not possible to tell because the demand function is not specified. The firm with lower fixed costs produces more.
Two firms, A and B, are contemplating exporting a local fruit called durian to another country that has strong demand for durian. If both firms export their durians, each firm can earn an export revenue of $25 million. If both firms do not export, each firm can earn a revenue of $12 million from their own domestic market. If one of them exports durians and the other does not export, the firm that exports durians can earn an export revenue of $50 million. But the non-exporting firm will earn a revenue of $18 million. (a)If both firms make a decision simultaneously, construct and analyse a payoff matrix and solve for the Nash equilibrium. Explain whether this is the prisoner’s dilemma game. (b) Suppose Firm A can make a decision before Firm B. Construct and analyse a decision tree model and determine the payoffs to both firms. Does timing matter in this game?
Consider a Bertrand game between two firms. The demand for firm 1's product is given by q1 = 100 - 3p1 + 2p2. The demand for firm 2's product is given by q2 100- 3p2 +2p1. In terms of notation, p1 is the price of firm 1's product and pa is the price of firm 2's product. The two firms choose their prices simultaneously. For your calculations below, assume zero costs and that prices are measured in dollars per unit. Find the equilibrium prices. as b Derive the firms' best-response functions and explain whether the prices are strategic substitutes or complements in this game.
If the demand shifts outward and the supply shifts outward the new equilibrium quantity will be higher, but the direction of the change in the equilibrium price is ambiguous. the new equilibrium price will be higher, but the direction of the change in the quantity is ambiguous. in the new equilibrium, the price will be higher but the quantity will be lower. in the new equilibium, the quantity will be higher but the price will be lower. in the new equilibrium, both price and quantity will be higher.
Determine the equilibrium price, output and profit for each firm assuming firm 1is the first mover and firm 2 is the follower
You manage a company that competes in an industry that is comprised of 3 equal-sized firms that produce similar products. A recent industry report indicates that the market is fairly saturated, in that a 10 percent industry-wide price increase would lead to a 22 percent decline in units sold by all firms in the industry. Currently, Congress is considering legislation that would impose a tariff on a key input used by the industry. Your best estimate is that, if the legislation passes, your marginal cost will increase by 1 dollar. Based on this information, what price increase would you recommend if the tariff legislation is passed by Congress? Instructions: Enter your response rounded to the nearest penny (two decimal places).