Suppose a duopoly in a market for a differentiated good. The demands and costs of the two companies, A and B, are given by: Qa 200 - 2Pa + Pb Qb 200 - 2Pb + Pa CTA = 550 + 46 Qa CTb 550 + 46 Qb Assuming that the two companies choose their price (Bertrand model), what quantity will be produced by firm A?
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- Assume that two companies (A and B) are duopolists who produce identical products. Demand for the products is given by the following linear demand function: P=200− Q A − Q B where Q A and Q B are the quantities sold by the respective firms and P is the selling price. Total cost functions for the two companies are TC A =1,500+55 Q A + Q A 2 TC B =1,200+20 Q B +2 Q B 2 Assume that the firms form a cartel to act as a monopolist and maximize total industry profits (sum of Firm A and Firm B profits). In such a case, Company A will produce units and sell at . Similarly, Company B will produce units and sell at . At the optimum output levels, Company A earns total profits of and Company B earns total profits of . Therefore, the total industry profits are . At the optimum output levels, the marginal cost of Company A is and the marginal cost of Company B is . The following table shows the long-run equilibrium if the firms act independently, as in the Cournot model…Imagine any market divided by 2 Cournot oligopolists who have identical costs Marginal cost = Average cost = 200. About this market, ask yourself: a) If the demand curve for this market is given by Q = 1250 - 2.5P, where Q is the total quantity demanded in the market and P is the selling price, both given in units, what is the reaction curve of the oligopolists? b) What will be the quantity produced and the selling price of the oligopolists? c) A strategist considers that a good marketing campaign would be able to expand the Demand of this market to Q = 1,500 - 2.5P and that in this way, oligopolists could produce the same amount and make significantly greater profits. Such a campaign would generate a reduction in profits in the order of 70,000. Is it worth making this investment in marketing?please explain in steps
- Suppose there are two pharma companies (A and B) vying to develop the first vaccine to cure AIDS. Assume a fixed MC across the two firms MCA = MCB = 4. Assume further that they both face a market demand of P = 12 -0.00004Q and Q=QA +QB. Assume firm B's reaction function is: QB = 125,000 - 0.5QA. Compute for: Firm A's Revenue or RA Firm A's Marginal revenue MR Output for firm A or QA and output for firm B or QB Market Q* and P*UCOM is able to purchase an exclusive right to sell a soccer channel (SC) in its market area. Let's assume that UCOM pays $150,000 a year for the exclusive marketing rights to SC. Since UCOM has already installed cable to all of the homes in its market area, the marginal cost of delivering Soccer Channel to subscribers is zero. The manager of UCOM needs to know what price to charge for the Soccer Channel service to maximize her profit. Before setting price, she hires an economist to estimate demand for the Soccer channel service. The economist discovers that there are two types of subscribers who value soccer. First are the 4,000 die-hard soccer fans who will pay as much as $150 a year for the new soccer channel. Second, the soccer channel will appeal to about 20,000 occasional TV viewers who will pay as much as $20 a year for a subscription to soccer channel. What is the deadweight loss associated with the non-discriminating pricing policy compared to the price discriminating…Suppose two profit-maximising firms, Firm 1 and Firm 2, produce an identical good. The market demand curve is P = 340 - 40 where Q = q1 + q2. The firms face costs TCi = 20gi for i = 1, 2. a) If both firms are price- setters, find the demand curve for each firm. What are the equilibrium quantity, price and profit for each firm?
- 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.= Suppose the inverse demand for a particular good is given by P 1200 12Q. Furthermore, there are only two firms, A and B. Firm A's marginal cost is a constant $25, and Firm B's marginal cost is a constant $20. Assume these two firms engage in Stackelberg competition, where Firm A moves first. If we assume that the firm with the lowest costs could supply the entire market, then the deadweight loss due to the market power these two firms exert through Stackelberg competition equals $_____. [Round your answer to two decimals.]The second part of the question is the most important one to get an answer to.
- A private golf club has two types of members. Serious golfers each have the demand curve Q = 250 - 10P, where Q represents the number of rounds played per year and P is the per- round price. Casual golfers have the demand curve Q = 100 - 10P. The club has 5 serious and 60 casual golfing members and faces a constant marginal cost and average cost of $ 5 per round played by either type of member. The club cannot distinguish high demanders from low demanders but is considering deploying a 2-part tariff pricing system? Specifically, the club is considering a per-unit price of $5 and a per-unit price of $6. What should they do and what are the profits they will earn? Be very clear in how you arrive at your answer.Three firms sell related products in a market. Their supply functions are 9₁ = P₁ 92= 2 P₂ = P3 The firms face the following demands =-5-4 P₁ +6P₂ +3 P3 9-58 +5 P₁-P₂ + 4 P3 q=54+4 P₁ + 4 P₂-2 P3 Given the above supply and demand functions, what price must each firm charge to equate supply and demand? P₁ P₂= Number P3 Number NumberAssume that two companies (A and B) are duopolists who produce identical products. Demand for the products is given by the following linear demand function: P=200-QA - QB where QA and QB are the quantities sold by the respective firms and P is the selling price. Total cost functions for the two companies are TCA = 1,500 + 55QA + Q₁² Assume that the firms form a cartel to act as a monopolist and maximize total industry profits (sum of Firm A and Firm B profits). In such a case, Company A will produce units and sell at Similarly, Company B will produce At the optimum output levels, Company A earns total profits of $ total industry profits are $ At the optimum output levels, the marginal cost of Company A is $ Cournot Equilibrium Company A Company B Total Industry Selling price The following table shows the long-run equilibrium if the firms act independently, as in the Cournot model (i.e., each firm assumes that the other firm's output will not change). Total industry output Price Output…