To examine the effects of a subsidy, consider the large passenger jetliners market with two firms that sell identical products, Firm 1 and Firm 2. Without any subsidy, both firms will have the same cost functions of C(q) = 40q and MC = 40. The market demand is P = 100 – Q. NEED CALCULATION HELP PLEASE!!! Solve for the Cournot equilibrium price, quantities, and profits for each firm given the same MC= 40. Compare the deadweight loss in a monopoly, a Cournot duopoly, and a Bertrand duopoly if both firms have the same marginal cost of 40. How would this market change if Firm 2 receives a subsidy lowering the marginal cost to 25 and Firm 1's marginal cost remains at 40. Calculate new market equilibrium quantity, price, and profits for each firm. Calculate the change in welfare after the subsidy. In this case welfare is defined as the Firm 2’s profit minus the subsidy. Who gains from the subsidy? Explain
To examine the effects of a subsidy, consider the large passenger jetliners market with two firms that sell identical products, Firm 1 and Firm 2. Without any subsidy, both firms will have the same cost functions of C(q) = 40q and MC = 40. The market demand is P = 100 – Q.
NEED CALCULATION HELP PLEASE!!!
Solve for the Cournot
Compare the
How would this market change if Firm 2 receives a subsidy lowering the marginal cost to 25 and Firm 1's marginal cost remains at 40. Calculate new
Calculate the change in welfare after the subsidy. In this case welfare is defined as the Firm 2’s profit minus the subsidy. Who gains from the subsidy? Explain
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