The fact that the firms in an oligopoly are mutually interdependent means that each firm: must consider the reactions of its competitors when it sets the price for its output. produces a product that is similar, but not identical, to the products of its competitors. produces a product that is identical to the products of its competitors. faces a perfectly elastic demand curve for

The fact that the firms in an oligopoly are mutually interdependent means that each firm: must consider the reactions of its competitors when it sets the price for its output. produces a product that is similar, but not identical, to the products of its competitors. produces a product that is identical to the products of its competitors. faces a perfectly elastic demand curve for

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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. =
The concept of a Nash equilibrium, when applied to an oligopoly, relies on the notion that Firm A in an oligopoly chooses its own best strategy based on which consideration? based on the strategies that other firms have chosen based on the knowledge that other firms are likely to choose their strategies in response to Firm A's choice of a strategy based on the objective of maximizing the collective profits of all firms in the industry based on the internal financial information of Firm A
Two identical firms compete as a Cournot duopoly. The inverse market demand they face is P-128 - 4Q. The total cost function for each firm is TC(Q;)=8Q; where i is firm 1 or firm 2. Based on this information firm 1 and 2's best response functions are Q₁16-0.25Q₂ and Q2-16-0.25Q1. Q₁16-0.5Q₂ and Q2-16-0.5Q₁. Q1-15-0.25Q2 and Q2=15-0.25Q1. Q₁15 -0.5Q2 and Q2 = 15-0.5Q₁.
Consider a Duopoly model, in which two firms decide a quantity sequentially. For the convenience, let's say Firm 1 is a dominant firm and Firm 2 is a follower. The market demand is given by P=110 - 5Q, where Q is the total output (i.e., Q=Q1+Q2). Each firm has an identical cost function, TCi=7Qi, i=1, 2. Each firm maximizes its profit by choosing the quantity. In this Stackelberg equilibrium, Firm 1 will sell how many units.
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