You are given the market demand functionQ= 3400 – 1000p,and that each duopoly firm's marginal cost is $0.28 per unit, which implies the cost function:C(4:) = 0.28qi,assuming no fixed costs for i = 1, 2.The Cournot equilibrium quantities are q,and 92(enter your responses as whole numbers).

Answered: Image /qna-images/answer/c6ddd4f2-8f31-43e9-9cd7-a494b863ec10.jpg

You are given the market demand function Q = 3400 – 1000p, and that each duopoly firm's marginal cost is $0.28 per unit, which implies the cost function: C(41) = 0.28%j. assuming no fixed costs for i = 1, 2. The Cournot equilibrium quantities are q, and q2 =(enter your responses as whole numbers). %3D

You are given the market demand function Q = 3400 – 1000p, and that each duopoly firm's marginal cost is $0.28 per unit, which implies the cost function: C(41) = 0.28%j. assuming no fixed costs for i = 1, 2. The Cournot equilibrium quantities are q, and q2 =(enter your responses as whole numbers). %3D

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

1. if the total cost function for this market is TC = 500 + 10Q2 , calculate the total and marginal costs for each of the quantities in the table. what is the demand function for this market? 2. What are the profit-maximizing quantity, price, and profit for this market? 3. If there are two firms Atlas and Bowden in this market with the same earlier total cost function and they engage in Cournot competition, what is each firm's equilibrium quantity, price, and profit? [NB: round quantities to nearest integer to find equilibrium quantity, price, and profit]
Please show indepth working out.
Consider the differentiated goods Bertrand price competition model where firms A and B produce similar goods and sell them at pA and pB. The demand for each firm’s product is given byqA =60−2pA +pB andqB =60–2pB +pA ,and there are NO costs of producing either good (all costs are 0). (a)Calculate the (Bertrand) equilibrium prices and the net profits of each firm (b) Now suppose that -instead of competing to maximize their own individual profits- the firms decide to “collude” and set prices pA and pB to maximize their joint profits (sum of their profits). What would be each firm’s optimal price and net profits? Compare these prices and profits with what you found in (a) (greater/smaller/the same?).
onsider a homogenous good industry with four firms. Total demand is given by D(p)=200-p.The variable (=marginal) cost of each of the firms is c1=10, c2=20, c3=30 and c4=35. Firms compete in prices. Suppose firms 1 and 2 merge into one entity and produce with a marginal cost of 15. Which of the following statements is correct? After the merger, total welfare increases by $500. After the merger, total welfare decreases by $500. After the merger, total welfare increases by $1000. After the merger, total welfare decreases by $1000. None of the above.
Suppose Giocattolo of Italy and American Toy Company of the United States are the only two firms producing toys for sale in the U.S. market. Each firm realizes constant long-term costs so that the average total cost (ATC) equals the marginal cost (MC) at each level of output. Thus, MCo = ATCO is the long-term market supply schedule for toys. Suppose Giocattolo and American Toy Company operate as competitors, and the cost schedules of each company are MCo = ATCO = $10. On the following graph, use the grey point (star symbol) to identify the competitive market equilibrium. Then, use the green triangle (triangle symbols) to identify consumer surplus in this case. Note: Select and drag the point from the palette to the graph. Dashed drop lines will automatically extend to both axes. Then select and drag the shaded region from the palette to the graph. To resize the shaded region, select one of the points and move to the desired position. ? PRICE (Dollars per toy) 20 18 16 14 10 00 6 4 2 0…
There are two identical firms in an industry, 1 and 2, each with cost function , i = 1,2. The industry demand curve is P = 100 − 5X where industry output, X, is the sum of the two firms’ outputs (X1 + X2). (a) If each firm makes its output decisions on the assumption that the other will not react to its choices (the Cournot assumption), what is the equilibrium output for each firm? What is the equilibrium price? (b) Suppose that each firm takes it in turn to choose its level of output, on the assumption that the other’s output level is fixed. Would the process of adjustment be stable? (c) Suppose that firm 1 introduces a cost-saving innovation, so that its cost curve becomes C1 = 8X1. Firm 2’s cost curve and the industry demand curve are unchanged. What happens to the equilibrium quantity produced by each firm and to market price?
Problem 5: Presently, Alpha Chemical and Beta Cleaners are the only suppliers of services that clean and refurbish| large holding tanks at manufacturing plants in the Northeast. No other suppliers have the equipment necessary to perform these treatments. The market inverse demand for these cleaning services is given below. P=800-80 where P is price per treatment and Q is total number of treatments per week. For simplicity, also assume that neither firm has fixed costs. From company records, you are given the following variable cost function for each firm: In the work that follows, you may round all your results to 2 decimal places to reduce the clutter in your answers. a. b. TVC₁ = 30 TVC, =5Q C. Suppose Elon Must is contemplating buying both companies and since Alpha has lower operating costs, his first thought is to shut down Beta and supply the entire market as a single plant monopoly. If he does this, what price will he charge per treatment and how many treatments will he sell each…
You are the manager of Taurus Technologies, and your sole competitor is Spyder Technologies. The two firms' products are viewed as identical by most consumers. The relevant cost functions are C(Q) = 4Q;, and the inverse market demand curve for this unique product is given by P= 100 -2 Q. Currently, you and your rival simultaneously (but independently) make production decisions, and the price you fetch for the product depends on the total amount produced by each firm. However, by making an unrecoverable fixed investment of $200, Taurus Technologies can bring its product to market before Spyder finalizes production plans. (Assume Taurus Technologies is the leader in this scenario.) What are your profits if you do not make the investment? $ What are your profits if you do make the investment? Instructions: Do not include the investment of $200 as part of your profit calculation. $ Should you invest the $200? O Yes - the cost of establishing the first-mover advantage exceeds the benefits.…
Consider the Bertrand model and answer the question below related to the content. Assume that each firm in the Bertrand Duopoly model can only choose non-negative integer quantities: 0, 1, 2, ... . Assume the demand is Q(P)=10-P and the marginal cost is 0 for each firm. Given this information, which of the following is FALSE? [Hint: Check values of profit functions.] A. If firm 2 sets price equal to 1, then the best response of firm 1 to this price is 1 B. If firm 2 sets price equal to 4, then the best response of firm 1 to this price is 4 C. If firm 2 sets price equal to 2, then the best response of firm 1 to this price is 1
A duopoly faces an inverse market demand of P(Q) = 150−Q.Firm 1 has a constant marginal cost of MC1 (q1) = $30.Firm 2's constant marginal cost is MC2 (q2) = $60.Assume fixed costs are negligible for both firms. Calculate the output of each firm, market output, and price if there is (A) a collusive equilibrium or (B) a Cournot equilibrium. (A) Collusive equilibrium (Enter your responses rounded to two decimal places) The collusive equilibrium occurs where q1 equals ?and q2 equals ? Market output is ? The collusive equilibrium price is ? (B) Cournot equilibrium (Enter your responses using rounded to two decimal places) The Nash-Cournot equilibrium occurs where q1 equals ? and q2 equals ? Market output is ? The equilibrium occurs at a price of ?
Consider an industry with N firms that compete by setting the quantities of an identical product simultaneously. The resulting market price is given by: p = 1000 − 4Q. The total cost function of each firm is C(qi) = 50 + 20qi . (a) Derive the output reaction of firm i to the belief that its rivals are jointly producing a total output of Q-i . Assuming that every firm produces the same quantity in equilibrium, use your answer to compute that quantity. (b) Suppose firms would enter (exit) this industry if the existing firms were making a profit (loss). Write down a mathematical equation, the solution to which would give you the equilibrium number of firms in this industry. You don’t have to solve this equation.
Consider Cournot competition with n identical firms. Suppose that the inverse demand function is linear with P(X) = a - bX, where X is total industry output, a; b > 0. Each firm has a linear cost function of the form C(x) = cx, where x stands for per firm output. It is assumed that a > c. a. At the symmetric equilibrium, what are the industry output and price levels? What are the equilibrium per firm output and profit levels? What is the equilibrium social welfare (defined as the difference between the area under the demand function and total cost)? b. Now let m out of n firms merge. Show that the merger is profitable for the m merged firms if and only if it involves a pre-merger market share of 80 percent. c. Show that each of the (n – m) non merged firms is better off after the merger. d. Show that the m-firm merger increases industry price and also lowers consumer welfare.