Select the correct statements. Note: Multiple correct, multiple selections. Topics covered: Stackelberg, Cournot, and Bertrand models. А. Suppose the inverse market demand function is P (y) = a - by, and the marginal cost of each firm is K (same and constant). In this market, the market price will be higher if the market is a Stackelberg duopoly than the market price if it is a Cournot duopoly market. В. A Stackelberg leader will necessarily make at least as much profit as he would if he acted as a Cournot oligopolist. O C. Suppose, in a Stackelberg duopoly, the follower's output is measured on the horizontal axis. Profits to the follower will increase as we move to isoprofit lines that are further to the left. D. The equilibrium in Bertrand duopoly where both firms sell identical products is Pareto efficient. Е. In Cournot duopoly, if each firm has the same marginal MC = K, each firm produces the same level of output and earns the same profit.

Select the correct statements. Note: Multiple correct, multiple selections. Topics covered: Stackelberg, Cournot, and Bertrand models. А. Suppose the inverse market demand function is P (y) = a - by, and the marginal cost of each firm is K (same and constant). In this market, the market price will be higher if the market is a Stackelberg duopoly than the market price if it is a Cournot duopoly market. В. A Stackelberg leader will necessarily make at least as much profit as he would if he acted as a Cournot oligopolist. O C. Suppose, in a Stackelberg duopoly, the follower's output is measured on the horizontal axis. Profits to the follower will increase as we move to isoprofit lines that are further to the left. D. The equilibrium in Bertrand duopoly where both firms sell identical products is Pareto efficient. Е. In Cournot duopoly, if each firm has the same marginal MC = K, each firm produces the same level of output and earns the same profit.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Consider a duopoly market with 2 firms. Aggregate demand in this market is given by Q = 500 – P, where P is the price on the market. Q is total market output, i.e., Q = QA + QB, where QA is the output by Firm A and QB is the output by Firm B. For both firms, marginal cost is given by MCi = 20, i=A,B. Assume the firms compete a la Cournot. What are the equilibrium quantities? What is the total quantity supplied on this market? What is the equilibrium price in this market?
Consider a Cournot oligopoly with two firms, where the demand curves are given by P, = 100-Q,-2Q2 P2= 100-2Q,-Q2 and that costs are given by TC(Q,) = Q'1. MC, = 2Q1, TC(Q2) = Q²2, and MC2 = 2Q2. Also, marginal revenues can be written as MR, = 100-2Q,-2Q2. MR2= 100- 2Q, - 2Q2. Solve for each firm's profit. Profit for firm 1= 600, Profit for firm 2= 300 Profit for firm 1= 300, Profit for firm 2= 600 Profit for firm 1= 555.55, Profit for firm 2= 555.55 O Profit for firm 1= 0, Profit for firm 2= 0
The firms in a duopoly produce differentiated products. The inverse demand for Firm 1 is The inverse demand for Firm 2 is and P₁ = 52-9₁-0.592. Each firm has a marginal cost of m= $1 per unit. Solve for the Nash-Cournot equilibrium quantities. The Cournot equilibrium quantities are (Enter your responses rounded to two decimal places.) P₂ = 100-92-0.5q1₁. 91 = units 92 units. =
Suppose the iceberg lettuce industry is a Cournot duopoly with two firms: Xtra Leafy (a) and Yummy Farms (y). Xtra Leafy produces q units of output and Yummy Farms produces qy units of output. Aggregate market output is Q = x + y. The (inverse) market demand schedule is: p = 176 - 2Q Both firms have identical cost structures: MC = MC₁ = ATC₂ = ATC₁ = $12 Find Xtra Leafy's Cournot reaction function of the form: 9x = a + bay Where "a" is the reaction function's intercept and "b" is its slope. Note: Please review the formatting instructions above. If any value is negative, be sure to include its negative sign. a. a= b. b = Hint: One of your answers will be negative. Think about why.
The equation of exchange is given by MXV = PxQ, where M is the money supply, V is the velocity of money, P is the economy's price level, and Q is Real GDP. Suppose the following diagram shows the current aggregate demand (AD) and aggregate supply (AS) curves in a hypothetical economy. PRICE LEVEL 2 12 REAL GDP (Trillions of dollars) AD O AS 2 ?
A homogeneous products duopoly faces a market demand function given by Q = 102P, where Q = Q₁ + Q2. Both Q1 firms have a constant marginal cost MC = 2. 1. Suppose the two firms set their quantities simultaneously by guessing the other firm's quantity choice. Derive the equation of each firm's reaction curve and then graph these curves. 2. What is the Cournot equilibrium quantity and price in this market for each firm? 3. What would the equilibrium price in this market be if it were perfectly competitive? 4. What is the Bertrand equilibrium price in this market?