Two firms compete in a market to sell a homogeneous product with inverse demand function P-600-3Q Each firm produces at aconstant marginal cost of $300 and has no fixed costs. Use this information to compare the output levels and profits in settingscharacterized by Cournot, Stackelberg, Bertrand, and collusive behavior.Instruction: Do not round intermediate calculations. Round final answers to two decimal places for Cournot values.Cournot output for each firm25 OCournot profits for each firm: $ 3750Stackelberg leader output: 5625 OStackelberg follower output:Stackelberg leader profits: $Stackelberg follower profits: $Bertrand market-level outputBertrand profits for each firm: $Collusive market-level output:Collusive industry-level profits: $

Step 1:This question refers to analyze the strategic decision making steps and results of two…

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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PROBLEM IV. Consider an industry consisting of two firms (i = 1,2) that are engaged in a Bertrand price competition. The demand function for the product of firm i is given by qi = 24 – 9p; + 6p;. The marginal cost of production for each firm is zero. Q12. The collusive price of the products is (a) 4 (b) 5 (c) 1 (d) 6 (e) 2
Suppose the iceberg lettuce industry is a Cournot duopoly with two firms: Xtra Leafy (a) and Yummy Farms (y). Xtra Leafy produces q units of output and Yummy Farms produces qy units of output. Aggregate market output is Q = x + y. The (inverse) market demand schedule is: p = 176 - 2Q Both firms have identical cost structures: MC = MC₁ = ATC₂ = ATC₁ = $12 Find Xtra Leafy's Cournot reaction function of the form: 9x = a + bay Where "a" is the reaction function's intercept and "b" is its slope. Note: Please review the formatting instructions above. If any value is negative, be sure to include its negative sign. a. a= b. b = Hint: One of your answers will be negative. Think about why.
wo firms A and B produce an identical product (Note: Industry Output = Q). The firms have to decide how much output qA and qB (Note: qA = Firm A Output; qB = Firm B Output) they must produce since they are the only two firms in the industry that manufacture this product. Their marginal cost (MC) is equal to their average cost (AC) and it is constant at MC = AC = X, for both firms. Market demand is given as Q = Y – 2P (where P = price and Q = quantity). Select any value for X between [21 – 69] and any value for Y between [501 – 999]. Using this information, calculate the Industry Price, Industry Output, Industry Profit, Consumer Surplus and Deadweight Loss under each of the following models: (a) Cournot Model error_outlineHomework solutions you need when you need them. Subscribe now.arrow_forward Question Two firms A and B produce an identical product (Note: Industry Output = Q). The firms have to decide how much output qA and qB (Note: qA =…
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cost function is c(y) An industry has two firms. Firm 1's cost function is c(y) = 3y + 200 and firm 2's 3y + 100. The demand curve for the output of this industry is a downward-sloping straight line. In a Cournot equilibrium, where both firms produce positive amounts of output: = The firm with higher fixed costs produces more. Both firms produce the same amount of output. There is less output than there would be if the firms colluded to maximize joint profits. It is not possible to tell because the demand function is not specified. The firm with lower fixed costs produces more.
cost function is c(y) An industry has two firms. Firm 1's cost function is c(y) = 3y + 200 and firm 2's 3y + 100. The demand curve for the output of this industry is a downward-sloping straight line. In a Cournot equilibrium, where both firms produce positive amounts of output: = The firm with higher fixed costs produces more. Both firms produce the same amount of output. There is less output than there would be if the firms colluded to maximize joint profits. It is not possible to tell because the demand function is not specified. The firm with lower fixed costs produces more.
help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working!
Economics Consider a three-firm homogeneous product industry. The market demand function is X=1000-40P. The cost functions of the firms are: C1= 20X1, C2=13.5X2+0.075X22, and C3=16.3X3+0.005X32. Where, X=X1 + X2 + X3. 1. Explain the Firm's Cournot Behaviour. 2. Assuming the firms' practice on Cournot Behaviour, calculate the market price, outputs of the firms and their profits
The inverse demand for a homogeneous-product Stackelburg duopoly is P=24000-5Q. The cost structures for the leader and the follower respectively are CL(QL)=3000QL and CF(QF)=4000QF. a) What is the followers reaction function? b) Determine the equilibrium output level for both the leader and the follower. Leader output: Follower output: c) Determine the equilibrium markert price $ d) Determine the profits of the leader and the follower. Leader profits: $ Follower profits: $
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2.- Each of two firms, firms 1 and 2, has a cost function C(q) = 1 2 q; the demand function for the firms' output is Q = 1.5-p, where Q is the total output. Firms compete in prices. That is, firms choose simultaneously what price they charge. Consumers will buy from the firm offering the lowest price. In case of tying, firms split equally the demand at the (common) price. The firm that charges the higher price sells nothing. (Bertrand model.) (a) Formally argue that there could be no equilibrium in prices other than p1 = p2 = 1 2. (b) Solve the same problem, but this time assuming that firms compete in quantities.Now, suppose that firm 1 has a capacity constraint of 1/3. That is, no matter what demand it gets, it can serve at most 1/3 units. Suppose that these units are served to the consumers who are willing to pay the most. Thus, even if it sets a price above that of firm 1, firm 2 may be able to sell some output. (c) Obtain the (residual) demand of firm 2 (as a function of its own…

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