Please answer all parts and do not use ChatGPT or other AI tools. Please give me the solution and specific answers. Thanks! ## Problem (1)Firms 1 and 2 have total cost functions $ TC_1(q) = q^2 $ and $ TC_2(q) = \frac{q^2}{3} $ (with $ MC_1(q) = 2q $ and $ MC_2(q) = \frac{2q}{3} $ respectively). They are competing in quantities in a market with (inverse) demand $ p = 630 - 2Q $.Determine the market price in each of the following market organization scenarios:**(a) [C] Cournot-Nash Equilibrium**- They are competing in Cournot competition.**(b) [S] Stackelberg Equilibrium**- As in (a), but A is the leader and chooses the quantity first (and B chooses her quantity afterwards, observing A’s choice).**(c) [M] Collusion**- They collude as in a cartel, to maximize joint profits.**(d) [P] Perfect Competition Benchmark**- They behave perfectly competitively, as price takers.**(e) Calculate the DWL (dead-weight loss, inefficiency) in the Stackelberg equilibrium in (b).** - (WARNING: tedious calculations!)**(f) (MULTIPLE CHOICE QUESTION: NO calculation/explanation needed!)** Which of the following 6 market arrangements below …(i) Firm 1 operates as a monopoly (Firm 2 doesn’t exist at all)(ii) Firm 1 operates as a perfectly competitive firm (as a price taker!) (Firm 2 doesn’t exist at all)(iii) Firm 2 operates as a monopoly (Firm 1 doesn’t exist at all)(iv) Firm 2 operates as a perfectly competitive firm (as a price taker!) (Firm 1 doesn’t exist at all)(v) Firm 1 and Firm 2 collude (Scenario (c) above)(vi) Firm 1 and Firm 2 operate as perfectly competitive firms as price takers (Scenario (d) above)**Which scenario maximizes Total Surplus (TS)?** [ ]**Which scenario maximizes Producer Surplus (PS)?** [ ]**Which scenario minimizes Consumer Surplus (CS)?** [ ]

The cost function defines the relationship between two variables i.e. the inputs and their prices. It includes both fixed and variable costs. Total cost refers to the expenses incurred in the production of goods or services. Marginal cost refers to the additional cost incurred by the producer for producing an additional unit of output. “Since you have posted a question with multiple sub-parts, we will provide the solution only to the first three sub-parts as per our Q&A guidelines. Please repost the remaining sub-parts separately.”The total cost function of firm 1 is TC1=q12The total cost function of firm 2 is TC2=q223The demand function is P=630−2QUnder Cournot competition Q=q1+q2The profit function of Firm 1 will be π1=Pq1−TC1π1=(630−2q1−2q2)q1−q12π1=630q1−2q1q2−3q12The profit function of Firm 2 will be π2=Pq2−TC2π2=(630−2q1−2q2)q2−q223The profit function of firm 1 is π1=Pq1−TC1π1=(630−2q1−2q2)q1−q12π2=630q2−2q1q2−7q223Take the first-order derivative of the profit functions to ascertain the quantitiesdπ1dq1=630−2q2−6q16q1=630−2q2q1=105−q23 (1)dπ2dq2=630−2q1−14q2314q23=630−2q1q2=135−3q17 (2)Equating (1) and (2)q1=105−13(135−37q1)q1=105−45+q17q1−q17=60q1=70q2=135−3∗707q2=105The market price will be P=630−2(70+105)=$280Firm 1 is the leader and chooses the quantity firstThe profit function of Firm 1 will be π1=Pq1−TC1π1=(630−2q1−2q2)q1−q12π1=630q1−2q1q2−3q12Put equation (2) in the above profit functionπ1=630q1−2q1(135−3q17)−3q12π1=630q1−270q1+6q127−3q12π1=360q1−15q127Take the first-order derivative of the profit functiondπ1dq1=360−30q17360=30q17q1=84q2=135−3∗847q2=99The market price will be P=630−2(84+99)=$264Firm 1 and Firm 2 collude together to form a cartel. Since the cost of firm 2 is lowest, the total cost of firm 2 will be used to ascertain the price.The profit function will be π=PQ−TC2π=(630−2Q)Q−Q23π=630Q−2Q2−Q23π=630Q−7Q23Take the first-order derivative of the profit functiondπdQ=630−14Q314Q3=630Q=630(3)14Q=135The market price will be P=630−2(135)=$360(a) The market price under Cournot competition is $280(b) The market price under Stackleberg competition is $264(c) The market price under the cartel is $360

Business

Economics

PROBLEM (1) Firms 1 and 2 have total cost functions TC₁(q) = q² and TC₂ (q) = ²/3 (with MC₁(q) = 2q and MC₂ (q) =) respectively. They are competing in quantities in a market with (inverse) demand p = 630 - 20. Determine the market price in each of the following market organization scenarios: (a) [C] Cournot-Nash equilibrium They are competing in Cournot competition. (b) [S] Stackelberg Equilibrium As in (a), but A is the leader and chooses the quantity first (and B chooses her quantity afterwards, observing A's choice). (c) [M] Collusion They collude as in a cartel, to maximize joint profits.

PROBLEM (1) Firms 1 and 2 have total cost functions TC₁(q) = q² and TC₂ (q) = ²/3 (with MC₁(q) = 2q and MC₂ (q) =) respectively. They are competing in quantities in a market with (inverse) demand p = 630 - 20. Determine the market price in each of the following market organization scenarios: (a) [C] Cournot-Nash equilibrium They are competing in Cournot competition. (b) [S] Stackelberg Equilibrium As in (a), but A is the leader and chooses the quantity first (and B chooses her quantity afterwards, observing A's choice). (c) [M] Collusion They collude as in a cartel, to maximize joint profits.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: What is the purpose of graphic analysis?

A: Graphical analysis refers to the data analysis done using graphical techniques in order to determine…

Q: are the pros and Cons of leveraging blockchain for process interoperability?

A: The question is asking about the advantages and disadvantages of using blockchain technology for…

Q: jsmod748o@emailify.shop

A: The email address you provided, j..o@emailify.shop, appears to be a disposable email address.…

Q: Suppose that in response to huge job losses in the U.S. textile industry, Congress imposes a 100…

A: Due to huge job losses in the U.S. textile industry, congress imposes a 100 percent tariff on…

Q: hat i nd Ho rovid xplan astict kes elasti

A: The elasticity is the percentage change concept and not the absolute change concept between the…

Q: The merry-go-round in Ross Park, a public park, was first installed in 1920 and has been…

A: A public good is a kind of good or service that is non-excludable and non-rivalrous in nature,…

Q: could you type ur answer i can't read ur handwr

A: The break even point is where the annual savings from the Solar Panel affect the initial investment.…

Q: Habit buying can be beneficial to consumers because (a) it result in paying lower prices for most…

A: The buying behavior of any customer depends on their habit , variety seeking, extended decision…

Q: Alex is injured and rushed to Care Hospitals for treatment. He spent 64 minutes at the hospital out…

A: The objective of the question is to calculate the service cycle efficiency for Alex's visit to the…

Q: qwertyuioopoytttrt

A: Unfortunately, "qwertyuioopoytttrt" doesn't seem to be a question with a specific answer or problem…

Q: how do you calculate customer's life time value?

A: In this world of tough competition customers are acquired and lost over the firm’s lifetime, but a…

Q: Q 1 2 3 4 5 6 7 8 9 10 FC $16 $16 $16 $16 $16 $16 $16 VC ATC $20 $36.00 $27.00 $38 $54 $23.33 $68…

A: In the long run, the market price equals the minimum average total cost (ATC) of producing any…

Q: Please write a short note on various Economic impacts of Information Technology.

A: The Information Technology refers to the usage of computers, networking or information systems to…

Q: A retailer bought several pairs of Jean's for $75,000. He sold all but 30 pairs got 86400 making a…

A: Let, retailer bought x pairs of jeans at price $y for each pair. Total cost: xy = $75,000 Since he…

Q: How did you get 5.49 for AVC?

A: Introduction Total cost includes all implicit and explicit cost that comes during production. Total…

Q: writr Cost–volume symbols?

A: Cost volume is a kind of cost accounting useful for short run consequences and also for primitive…

Q: PLS HELP ASAP ON BOTH

A: False. Descriptions of products and services should typically address the features, benefits, and…

Q: Having the ability to utilise a computer effectively offers a variety of benefits. In terms of…

A: Technology improves the use of goods and services in a secure manner. It seeks to add value.…

Q: What are speed payments? Could they potentially be ethical? Does it matter where speed money…

A: Speed payments, also known as 'facilitation payments' or 'grease payments', are small bribes paid to…

Q: High quality information gruarantees that every decisions made will be a successful one that…

A: High-quality information refers to information that is: Accurate Complete Unique Consistent These…

Q: It is Thursday, which means local handymen Val and Earl have to empty the septic tank of a neighbor…

A: Nash equilibrium is the point of a game corresponding to which each participant optimizes his…

Question

Please answer all parts and do not use ChatGPT or other AI tools. Please give me the solution and specific answers. Thanks!

## Problem (1)

Firms 1 and 2 have total cost functions $ TC_1(q) = q^2 $ and $ TC_2(q) = \frac{q^2}{3} $ (with $ MC_1(q) = 2q $ and $ MC_2(q) = \frac{2q}{3} $ respectively). They are competing in quantities in a market with (inverse) demand $ p = 630 - 2Q $.

Determine the market price in each of the following market organization scenarios:

**(a) [C] Cournot-Nash Equilibrium**
- They are competing in Cournot competition.

**(b) [S] Stackelberg Equilibrium**
- As in (a), but A is the leader and chooses the quantity first (and B chooses her quantity afterwards, observing A’s choice).

**(c) [M] Collusion**
- They collude as in a cartel, to maximize joint profits.

**(d) [P] Perfect Competition Benchmark**
- They behave perfectly competitively, as price takers.

**(e) Calculate the DWL (dead-weight loss, inefficiency) in the Stackelberg equilibrium in (b).**
- (WARNING: tedious calculations!)

**(f) (MULTIPLE CHOICE QUESTION: NO calculation/explanation needed!)** Which of the following 6 market arrangements below …

(i) Firm 1 operates as a monopoly (Firm 2 doesn’t exist at all)

(ii) Firm 1 operates as a perfectly competitive firm (as a price taker!) (Firm 2 doesn’t exist at all)

(iii) Firm 2 operates as a monopoly (Firm 1 doesn’t exist at all)

(iv) Firm 2 operates as a perfectly competitive firm (as a price taker!) (Firm 1 doesn’t exist at all)

(v) Firm 1 and Firm 2 collude (Scenario (c) above)

(vi) Firm 1 and Firm 2 operate as perfectly competitive firms as price takers (Scenario (d) above)

**Which scenario maximizes Total Surplus (TS)?** [ ]

**Which scenario maximizes Producer Surplus (PS)?** [ ]

**Which scenario minimizes Consumer Surplus (CS)?** [ ]

Definition Definition Structural system an enterprise uses to collect, store, report, retrieve, and process financial data. Accounting information systems are used by business analysts, auditors, accountants, and consultants for accurate and efficient access to financial data.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Cost

VIEW

Step 2: Determine market price in Cournot competition

VIEW

Step 3: Determine market price in Stackelberg competition

VIEW

Step 4: Determine market price in Cartel

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 5 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.