Suppose the iceberg lettuce industry is a Cournot duopoly with two firms: Xtra Leafy (a) and YummyFarms (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 - 2QBoth firms have identical cost structures:MC = MC₁ = ATC₂ = ATC₁ = $12Find Xtra Leafy's Cournot reaction function of the form:9x = a + bayWhere "a" is the reaction function's intercept and "b" is its slope. Note: Please review the formattinginstructions 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.

A reaction function in the context of game theory and oligopoly competition like Cournot…

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=9x+qy. The (inverse) market demand schedule is: p = 176-2Q Both firms have identical cost structures: MC = MC₁ = ATC = 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 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=9x+qy. The (inverse) market demand schedule is: p = 176-2Q Both firms have identical cost structures: MC = MC₁ = ATC = 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.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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**Practice**
(Preferably answered digitally as I have a hard time understanding paper hand writing.)