Problem 2:Presently, APlus Transport and Big Movers are the only suppliers of services that haulheavy construction equipment between jobs within the Midwest. No other suppliershave the equipment necessary to perform the service. The market inverse demand forthese hauling services is given below.P = 4,030-4Qwhere P is price per trip and Q is total number of trips per year. For simplicity, alsoassume that neither firm has fixed costs. From company records, you are given thefollowing variable cost function for each firm:a.C.TVC = 300TVCB = 80QBb. Calculate the Cournot market equilibrium price-output solutions for each firmincluding their respective profits.d.Assume these two competitors operate as a two-firm Cournot duopoly. Findthe reaction functions for each firm.Suppose Big Movers shuts down operations so that APlus now has amonopoly in this market. What is the price, quantity, and profits for APlus afterthis change?Summarize the results of your findings over the two possible outcomes. Inyour summary include price, quantity and industry profits. Comment on yourresults.

A market structure in which two firms dominate the market for a particular product or service is…

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. 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. b. C. P=4,030-40 d. TVC₁ = 300A TVCB=80QB Assume these two competitors operate as a two-firm Cournot duopoly. Find the reaction functions for each firm. Calculate the Cournot market equilibrium price-output solutions for each firm including their respective profits. 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 two possible outcomes. In your summary include price, quantity and industry profits. Comment on your results.

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. 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. b. C. P=4,030-40 d. TVC₁ = 300A TVCB=80QB Assume these two competitors operate as a two-firm Cournot duopoly. Find the reaction functions for each firm. Calculate the Cournot market equilibrium price-output solutions for each firm including their respective profits. 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 two possible outcomes. In your summary include price, quantity and industry profits. Comment on your results.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

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 two possible outcomes. In
your summary include price, quantity and industry profits. Comment on your
results.

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Step 1: Defining Duopoly and Monopoly.

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Step 2: Finding the reaction curves for each firm.

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Step 3: Finding the Cournot Market Equilibrium.

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Step 4: Finding the equilibrium if Firm A was a Monopoly.

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