Question 6 P3 MC ATC P3 Xu f P2 P1 Quantity P2 Price P1 Price Q2 Q3 QW QXQX QZ more firms in the industry but lower levels of output for each firm. fewer firms in the market. SO a new long-run equilibrium at point X in panel (b). lower prices once the new long-run equilibrium is reached. DO D1 S1 Suppose that this market starts at price equal to P2 and quantity QZ. A decrease in demand will cause Quantity

Question 6 P3 MC ATC P3 Xu f P2 P1 Quantity P2 Price P1 Price Q2 Q3 QW QXQX QZ more firms in the industry but lower levels of output for each firm. fewer firms in the market. SO a new long-run equilibrium at point X in panel (b). lower prices once the new long-run equilibrium is reached. DO D1 S1 Suppose that this market starts at price equal to P2 and quantity QZ. A decrease in demand will cause Quantity

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Continuing with inverse demand p = 50 - Q, if each firm has marginal cost of 0, what is the difference between the equilibrium price under Cournot competition and under Bertrand competition? The Cournot price is higher than the Bertrand price by 50. The Cournot price is lower than the Bertrand price by 25. The Cournot price is higher than the Bertrand price by 50/3. Equilibrium prices under Cournot and Bertrand are the same, so the difference is zero.
Question 3 Suppose a market demand function is given by QD(P) = 1,000 - 10P. The product can be produced with a cost function C(Q) = 10,000 + 20Q. (a) Determine Q and P and the firm's profit if there is a single firm. (b) Determine total output Q, the equilibrium price, and the profit of each firm if there are two firms (i.e., a Cournot oligopoly). (c) Determine Q. the equilibrium price, and the profit of each firm if there are 10 firms.
Use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 10 firms in the market. (Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 15 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 20 firms. PRICE (Dollars per pound) 100 90 80 70 80 50 40 30 20 10 0 0 125 250 375 500 825 750 875 1000 1125 1250 QUANTITY (Thousands of pounds) Demand Because you know that competitive firms earn Supply (10 firms) True Supply (15 firms) If there were 10 firms in this market, the short-run equilibrium price of rhodium would be $ would . Therefore, in the long run, firms would False Supply (20 firms) per pound. From the graph, you can see that this means there will be ? per pound. At that price,…
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.
Feedback Imagine that the flat-screen TV market is made up of one large firm that leads the industry and sets its own price first, and another firm that follows the leader when deciding its own profit-maximizing strategy. The leader has a cost function of c₁ (91) = 5q1, and the follower has a cost function of CF (ar) = 4, where Q =q₁ + qr. Total market demand for flat-screen TVs is given by the function Q = 250.00-2p. Calculate the following values: Leading firm's production: q = Follower firm's production: qp = Equilibrium price: p= $49.37 9 OF 16 QUESTIONS COMPLETED 118.33 32.92 (Round to two decimals if necessary.) (Round to two decimals if necessary.) (Round to two decimals if necessary.) See Hint 4 VIEW SOLUTION SUBMIT ANSWER
The firm ACME, Inc. operates in a competitive market because OACME, Inc. is one of a few firms and entry in this market is easy OACME, Inc. can influence the market price and sells a product different from other firms in the market OACME, Inc. is one of many firms selling the same product and, market entry is easy OACME, Inc. is one of many firms selling the same product and, market entry is blocked
Q4) Answer the following, providing a graphical illustration along with your answer where necessary: a) What is the profit maximising condition? b) Explain what is meant by abnormal profit? What is the adjustment process from short-run abnormal profit to long-run equilibrium in a perfectly competitive market? c) Please find below Pricing options for firm A and B, along with individual payoffs (Firm A's payoff/Firm B's payoff) Firm A Price £2 Price £1 Assume you are the pricing manager at Firm A; i) ii) Price £2 £10,000/£10,000 £12,000/£5,000 Firm B Price £1 £5,000/£12,000 £6,000/£6,000 What is your payoff for a 'maximin' strategy? What is your payoff for a 'maximax' strategy? Does a dominant strategy exist within this prisoners' dilemma?
Suppose that demand for a particular style of handmade Rwandan baskets is Qd = 1700 – 10P. Each basket maker has the following cost function: TCi = 1000 + 50 qi + .1 qi^2. Given this information, find the market outcomes under the various market structures below Perfect competition, long-run. Given the same cost functions above, find the long-run equilibrium quantity per firm, the LR market price, market quantity and equilibrium number of firms. What is the profit or loss per firm? What is MCi and ATCi?
PRICE (Dollars per pound) 8. Short-run supply and long-run equilibrium Consider the competitive market for rhodium. Assume that no matter how many firms operate in the Industry, every firm is identical and faces the same marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves plotted in the following graph. COSTS (Dollars per pound) 30,90 100 90 80 70 60 50 40 ATC 30 20 AVC 10 MC 0 0 + 5 10 15 20 25 30 35 40 45 50 QUANTITY (Thousands of pounds) The following graph plots the market demand curve for rhodium. Use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 10 firms in the market. (Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 20 firms. Finally, use the green points (triangle symbol) to plot the…
Determine the equilibrium price, output and profit for each firm assuming firm 1is the first mover and firm 2 is the follower
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