Industrial EconomicsIf two firms compete à la Bertrand with symmetric costs, the decrease in the marginal cost of one of the two firms:O (a) always shifts the reaction function of the other firmO (D) always leads to an increase in equilibrium priceO (c) always leads to an increase in the profit of the other fimO (0) None of the aboveSuccessivo

Oligopoly is a market structure in which there are very few large firms in the market and the entry…

two firms compete à la Bertrand with symmetric costs, the decrease in the marginal cost of one of the two firms: O (a) always shits the reaction function of the other firm O (b) always leads to an increase in equilibrium price O (c) always leads to an increase in the profit of the other fim O (d) None of the above

two firms compete à la Bertrand with symmetric costs, the decrease in the marginal cost of one of the two firms: O (a) always shits the reaction function of the other firm O (b) always leads to an increase in equilibrium price O (c) always leads to an increase in the profit of the other fim O (d) None of the above

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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.
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QUESTION 13 Consider a market where two firms (1 and 2) produce differentiated goods and compete in prices. The demand for firm 1 is given by D₁(P₁, P2) = 140 - 2p1 + P2 and demand for firm 2's product is D2 (P1, P2) 140 - 2p2 + P1 Both firms have a constant marginal cost of 20. What is the Nash equilibrium price of firm 1? (Only give a full number; if necessary, round to the lower integer; no dollar sign.)
40 36 32 28 24 20 16 12 8 47 0 P 4 Firm in oligopoly market MC 2 MR MC 1 D 8 12 16 20 24 28 32 40. Assuming MC2 to be the true marginal cost curve for this oligopoly firm, what price will this firm charge? (a) $8 Ⓒ (b) $12 (c) $15 (d) $20 Q
Scenario: Madison Company is a large manufacturer and distributor of cake supplies. It is based in Chicago(Headquarters) and Trinidad. It sends supplies to firms throughout the United States and the UnitedKingdom. It markets its supplies through periodic mass mailings of catalogs to those firms. Itsclients can make orders over the phone and Madison ships the supplies upon demand.The main competition for Madison’s in the United States comes from one U.S. firm and oneCanadian firm. A British firm has a small share of the U.S. market but is at a disadvantagebecause of its distance. The British firm’s marketing and transportation costs in the U.S. marketare relatively high. Given that one-third of the company sales are exported to the United Kingdom and invoices forexports are in US dollars, the demand for its exports is highly sensitive to the value of the Britishpound. In order to maintain its inventory at a proper level, it must forecast the total demand for itsproducts which is…
Please no written by hand solution Suppose two firms compete in quantities (Cournot). Market demand is given by P = 260 − 2Q, where Q = q1 + q2. Both firms have constant MC = AT C = 20.a. Solve for the Cournot equilibrium and find the Cournot equilibrium profits for each firm.b. Now suppose the two firms formed a cartel. What would be the profits for each firm then?c. If firm 2 sticks to the cartel agreement (quantity), then what is the best response for firm 1 (if firm 1 were to deviate)? Find the profits for firm 1 from deviating.d. How large must the probability-adjusted discount factor be in order for the cartel to be stable?e. How would the answer to part d. change if the two firms were competing in prices (Bertrand)?Please answer all steps, because no too much detailed answers required.
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Help me understand part a-c