EXPLORING ECONOMICS
8th Edition
ISBN: 2818000015614
Author: Sexton
Publisher: SAGE
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Question
Chapter 15, Problem 14P
To determine
To explain:
The nature of the mutual interdependence between the two firms. Whether a Nash equilibrium is evident.
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Students have asked these similar questions
Two firms are competing in a Cournot duopoly. Both firms have the same constant marginal cost. The market demand is linear.
Suppose the constant marginal cost of firm 2 is increasing.
Which of the following statements are correct? [There may be more than one correct statement.]
The quantity of firm 1 and the quantity of firm 2 both go up.
The quantity of firm 1 goes up and the quantity of firm 2 goes down.
The market price goes down.
The market price goes up.
The quantity of firm 1 and the quantity of firm 2 go down.
The quantity of firm 1 goes down and the quantity of firm 2 goes up.
The market price stays the same.
evaluate the impact of government interventions, such as antitrust regulations, price controls, or subsidies, on various market structures. Select a specific industry and examine how these interventions have influenced competition, consumer welfare, and economic efficiency. Provide the pros and cons of government intervention.
Consider an economy that exhibits both population growth (L grows at rate n) and
technological progress (A grows at rate a) described by the production function,
Y = F(K, AL) = Ka (AL)¹-α
Here K is capital and Y is output.
(a) Show that this production function exhibits constant returns to scale. [2 marks]
(b) What is the per-effective-worker production function, y = f(k), (where y = Y/AL
k K/AL)? (Show your working.)
[2 marks]
(c) Find expressions for the steady-state capital-output ratio, capital stock per
effective worker, and output per effective worker, as a function of the saving rate
(s), the depreciation rate (8), the population growth rate (n), the rate of
technological progress (a), and the coefficient a. (You may assume the condition
that capital per effective worker evolves according to Ak = sf (k) - (a+n+8)k.)
[5 marks]
(d) Show that at the Golden Rule steady state the saving rate for this economy is
equal to the parameter a.
[6 marks]
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