The next question has two parts. Part I. Consider a Cournot game among sellers of homogeneous products. Assume that demand is p=64-8Q, that each seller has a cost function C(q)=4q and that the cost of entering the market is K=5. How many firms would profitably enter the market? [Remark: n should be an integer number so writ your answer as an integer number rounding down; e.g. 5,8 firms rounds to 5 firms.]

The next question has two parts. Part I. Consider a Cournot game among sellers of homogeneous products. Assume that demand is p=64-8Q, that each seller has a cost function C(q)=4q and that the cost of entering the market is K=5. How many firms would profitably enter the market? [Remark: n should be an integer number so writ your answer as an integer number rounding down; e.g. 5,8 firms rounds to 5 firms.]

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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(Preferably answered digitally as I have a hard time understanding paper hand writing.)
Dear tutor, please solve all the part of the question as very clear and detailed. THANK YOU SO MUCH!!!
Let ci be the constant marginal and average cost for firm i (so that firms may have different marginal costs). Suppose demand is given by P=1-Q. Calculate the Nash equilibrium quantities assuming there are two firms in a Cournot market. Also compute market output, market price, firm profits, industry prof- its, consumer surplus, and total welfare. Represent the Nash equilibrium on a best-response function diagram. Show how a reduction in firm 1’s cost would change the equilibrium. Draw a representative isoprofit for firm 1.