Two firms, App and Sam, producing a good named Smart 13 compete in a Stackelberg duopoly. The inverse demand equation is P=25-(9,+92)the total cost function for Sam (the follower) is TC2=3q2. Determine the leader's maximum profit.The total cost function for App (the leader) is TC1 =1q1, andMoving to another question will save this response.Question 6 of 22

In a Stackelberg duopoly, the leader firm set its production quantity, first, knowing the follower…

Answered: Two firms, App and Sam, producing a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider Atlanta as an oligopoly market with five airlines that behave in a Cournot Model fashion. The Atlanta market demand schedule is:P = 580 - 1.5*Q.The Cost schedule for Delta is:MC=AC=Scomp=110.The Cost schedule for the other four firms (United, Southwest, et al) is:MC=AC=Scomp=90.What is the Cournot Market Price
Consider a Bertrand duopoly where market demand is P(Q)=5-9Q. Each firm faces a marginal cost $2 and no fixed cost. How much is the dead weight loss in a Nash equilibrium?
There are two firms in a market and they compete in a Nash-Cournot manner. Firm 1 faces the demand function p1(g1,92) = 200 - 91 - 92, and has a total cost function TC1 = (91)2. Firm 2 faces the demand function p2(91,92) = 160 - 92 - 91, and has a total %3D cost function TC2 = (92)2. Answer each of the following questions. a. Find the Nash-Cournot equilibrim output and price v for firm 1. b. Find the Nash-Cournot equilibrim output v and price v for firm 2.
Two firms, A and B, sell the same good X in a market with total demand Q = 100 – P. The two firms compete on quantities and decides how much to produce simultaneously. Firm A cost function is C(qA) = 40qA. Firm B cost function is C(qB) = 60qB. 1. Find the best reply functions of both firms and represent them in a graph. 2. Find the quantity produced by each firm in a Nash equilibrium. 3. Find the firms and consumers surplus. 4. Compare the surplus of firms found above with the surplus arising when both firm cooperate to sustain a monopoly outcome. 5. Assume now that A and B compete as in a Stackelberg model. A chooses first and B chooses after observing the choice of A. Find equilibrium quantities produced by each firm and the market equilibrium price.
The market for chocolate covered macadamias is characterised by demand Qd =200 p. Initially, there are only 10 firms selling chocolate covered macadamias, and strict barriers to entry prevent any new firms from entering the market. Each has costs given by c(q) = q² + 6 for q > 0 and c(g) = 0 for q = 0. If rounding is needed, please round your answers to 3 decimal places. a) (0.5 point) If all 10 firms behave like price-takers, what will be the price of chocolate covered macadamias? 33.3 b) (0.5 point) Now barriers to entry are lifted, and any number of identical firms (with the same cost structure) can enter. How many new firms (i.e. not counting the original 10) will have entered when the market is in long run equilibrium? 79.9 c) (1 point) Now suppose a new type of firm with a new technology for producing chocolate covered macadamias arrives on the scene. Each of these new firms has costs given by c(q) = q² + 3 for q > 0 and c(q) = 0 for q = 0. If there are no barriers to entry or…
There are two firms competing in the market for Airplanes - Boeing (B) and Airbus (A). The market demand is given by Q = 120 - p. Their marginal cost are as follows: MCB = $20, MCA = $40. (Think of price being in millions.) How many airplanes did Boeing sell in this Airplane (please put your answer in numerical values with no comma or decimal place). How many airplanes did Airbus sell in this Airplane market? (please put your answer in numerical values with no comma or decimal place). What is the total quantities of airplanes sold in the market? (please put your market? answer in numerical values with no comma or decimal place) What is the equilibrium price in millions? million (please put your answer in numerical values with no dollar sign, comma or decimal place). What is Boeing's profit in millions? million (please put your answer in numerical values with no dollar sign, comma or decimal place). What million (please put your answer in numerical values with no dollar (please put is…
Three oligopolistic banks operate in the loan market with the inverse demand functiongiven by r (Q) = a-Q, where r is the interest rate per unit of loan and Q = q1 +q2 +q3and qi>=0 is the total amount of loans issued by bank i = 1, 2, 3. Also, a > 0 is aconstant. The cost of funds for bank i is given by cqi, where c belongs (0, a) is a constant.A bank's profit from loans is (r -c)qi. (1) Suppose the banks engage in Cournot competition. Find the symmetricNash equilibrium. How much profit does each bank make? (2) Now suppose banks compete in the following sequential manner: Bank1 chooses q1. Then banks 2 and 3 observe q1 and then simultaneously choose q2and q3, respectively. Find the subgame perfect equilibrium. How much profit doeseach bank make here? Does bank 1 enjoy an advantage being the first mover?
Two identical firms compete as a Cournot duopoly. The demand they face is P = 100-2Q. The cost function for each firm is C(Q)= 40. In equilibrium, the deadweight loss is Multiple Choice $256. $512 $128 5394
Problem 3 Consider the infinitely repeated game with the discount factor & € (0, 1) of the following Cournot duopoly model with inverse demand function P(Q) = a Q if Q≤ a 0 if Q > a where Q = 91 +92 and cost functions Ci(qi) = cqi, i = 1,2. The profit function of firm i is given by Ti (91, 92) = qiP(9₁ +92) - cqi. Consider the following grim-trigger strategy. Produce half the monopoly output in the first period and as long as everybody has produced that amount so far. Otherwise produce the Cournot output. Verify that this is a subgame perfect equilibrium.
All question are with regards to the following set up. There are two firms A and B. Firms compete in a Cournot Duopoly in Karhide. They set quantities qa and qB. Inverse demand is P(qA + qB) = 18 – qA – qB and costs are C(q) (in Karhide,) and firm A is a foreign firm (from Orgoreyn.) The government of Karhide engages in a strategic trade intervention by giving firm B a per unit subsidy of s. (That is, when firm B produces and sells qB units, firm B receives a payment of s * qB from the government.) You must show your work at each step, unless the questions is followed by "No work required." 3 * q for both firms. Firm B is a domestic firm (4) We now consider the government’s choice of s≥0. We can see from above thatprofits and outputs depend upon s. With that in mind, let πB(s) and qB(s) denote firm B’s profit and output as a function of the subsidy s. Let qA(s) denote firm A’s equilibrium output as a function of s. Let G(s) = πB(s) − s*qB(s) denote the government’s objective…
Consider a Cournot oligopoly with two firms, where the demand curves are given by P, = 100-Q,-2Q2 P2= 100-2Q,-Q2 and that costs are given by TC(Q,) = Q'1. MC, = 2Q1, TC(Q2) = Q²2, and MC2 = 2Q2. Also, marginal revenues can be written as MR, = 100-2Q,-2Q2. MR2= 100- 2Q, - 2Q2. Solve for each firm's profit. Profit for firm 1= 600, Profit for firm 2= 300 Profit for firm 1= 300, Profit for firm 2= 600 Profit for firm 1= 555.55, Profit for firm 2= 555.55 O Profit for firm 1= 0, Profit for firm 2= 0

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