Supposed to demand for a product is P=150 - Q and that the marginal cost of producing the product is $50. If two firms compete in a Cournot oligopoly in this market what is the best response function for firm one?

Supposed to demand for a product is P=150 - Q and that the marginal cost of producing the product is $50. If two firms compete in a Cournot oligopoly in this market what is the best response function for firm one?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter15: Oligopoly And Strategic Behavior

Section: Chapter Questions

Problem 2P

See similar textbooks

Similar questions

If firm 1 and firm 2 are the oligopolistic firms in bottled spring water production in Nomansland. The market demand is given by ? = 5000 −20?, Qd is the number of kilolitres demanded per month while P is the price of kilolitres of bottled water. The marginal cost of a kilolitre of bottled water is R10.How do I Find the Cournot equilibrium quantities and price? and how do I Find the Cournot profits and the monopolist profits?
Consider the following normal form representation of the standard competition between firm A and firm B. Each firm can choose either standard A or standard B. Their payoffs are given as follows: Firm B A В A Firm A В 1 1 3 1 (1) (10 points) What's Nash equilibrium (NE) in this game? If there are more than one, find them all. But there is no NE, state that there is no NE. (2) (10 points) If you find a NE (or multiple Nash equilibria), is it (or are they) Pareto efficient?
In the initial Cournot oligopoly equilibrium, both firms have constant marginal costs, m, and nofixed costs, and there is a barrier to entry. Determine what happens to the best-response functionof firms if both firms now face a fixed cost of F
QUESTION 14 Consider a oligopoly with two firms. Each firm has constant marginal cost of 3 dollar per unit and zero fixed costs. Suppose the market demand curve is P = 15 - Q, where Q = Q₁ + Q₂ is the sum of the quantities produced by both firms. Suppose each firm can produce either 1, 2, 3, or 4 units. Which of the following is a Nash equilibrium outcome? Each firm produces 4 units. Each firm produces 3 units. Each firm produces 1 unit. Each firm produces 2 units.
Consider a Stackelberg duopoly:There are two firms in an industry with demand Q = 1 − Pd.The “leader” chooses a quantity qL to produce. The “follower” observes qL and chooses a quantity qF.Suppose now that the cost function is Ci(qi) = qi2 for i = L, F. (a) Find the subgame perfect equilibrium. (b) Compare the equilibrium you found with the Nash equilibrium if the game was simultaneous (i.e., Cournot competition). Is the Nash equilibrium of the Cournot game also a Nash equilibrium of the sequential game? Why or why not?
The market quantity in a perfectly competitive market is 600. If there are 3 firms in a costless Cournot-style oligopoly in this market, what quantity will be sold? The quantity sold in this market would be Q=
Consider a Cournot duopoly. The inverse demand function of the market is given by p = 10-Q, where p is the market price, and Q = 91 +92 is the aggregate output. The marginal costs of the two firms are C₁ 1 and C₂ = 4. = (a) Solve for the Nash equilibrium of the game including firm out- puts, market price, aggregate output, and firm profits. (b) Now suppose these two firms play a 2-stage game. In stage 1, they produce capacities 9₁ and 92, which are equal to the Nash equilibrium quantities of the Cournot game characterised by part (a). In stage 2, they simultaneously decide on their prices p₁ and P2. The marginal cost for each firm to sell up to capacity is 0. It is impossible to sell more than capacity. The residual demand for 10 Piāj if Pi > Pj firm ij, is Di (Pi, Pj) = 10-Pi 2 = if pipi. (Note, if Pi < Pj 10 - Pi here we assume that the efficient/parallel rationing applies). Prove that it is a Nash equilibrium of the second stage subgame that each firm charges the market clearing…
Consider a Cournot oligopoly with three firms i = 1; 2; 3. All firms have the same constant marginal cost c = 1. The inverse demand function of the mParket is given by P = 9Q, where P is the market price, and Q = (q1 + q2+q3) is the aggregate output. Solve for the Nash equilibrium of the game including firm outputs, market price, aggregate output, and firm profts
In a Cournot duopoly model, the market demand curve is given by P 100 - yI - y2- !! where y, is the amount of output firm 1 produces and y2 is firm 2's level of output. The cost function of firm 1 is c(y1) 75 +8y1. The cost function of firm 2 is c(y2) = 100 +12y2. %3D The reaction function of firm 1 is y1 = -0.5y2- The reaction function of firm 2 is y2 = -0.5y1- In the Cournot equilibrium, firm 2 produces units of output and makes a producer surplus of $
Solve for the Stackelberg subgame-perfect Nash equilibrium for the fol- lowing game tree (see next page). What is the joint-profit maximizing outcome? Why is that not the outcome of this game?
Consider a Cournot oligopoly with three firms i = 1,2, 3. All firms have the same constant marginal cost c = 1. The inverse demand function of the market is given by P = 9-Q, where P is the market price, and Q = E1 9i is the aggregate output. 3 (a) Solve for the Nash equilibrium of the game including firm out- puts, market price, aggregate output, and firm profits (Hint: the NE is symmetric). (b) Now suppose these three firms play a 2-stage game. In stage 1, they produce capacities q1, 72 and 73, which are equal to the Nash equilibrium quantities of the Cournot game characterised by part (a). In stage 2, they simultaneously decide on their prices p1, p2 and p3. The marginal cost for each firm to sell up to capacity is 0. It is impossible to sell more than capacity. The residual demand for firm i is 9 – Pi - Eiti āj if pi > P; for all j # i if p; = Pj for all j # i if p; < P; for all j #i | 9-pi D; (pi, p-i) = 3 9 – p; (Note, here we assume that the efficient/parallel rationing ap-…
Two firms in a Cournat oligpoly each have the best response function, such that the optimal quantity for each individual firm to produce must satisfy the equation: Q-27-Q/2 What quantity Q will each firm produce in the market? Type your answer...