Microeconomic Theory
Microeconomic Theory
12th Edition
ISBN: 9781337517942
Author: NICHOLSON
Publisher: Cengage
Question
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Chapter 15, Problem 15.2P

a)

To determine

To determine profit maximising price-quantity combination and profits for a monopolist.

b

To determine

Nash equilibrium quantities for Cournot duopolists, which choose quantities simultaneously. Also compute market output, market price, and firm and industry profits.

c)

To determine

Nash equilibrium prices for Bertrand duopolists. Also compute firm and market output, and firm and industry profits.

d)

To determine

Nash equilibrium quantities for n identical firms in a Cournot model. Also compute market output, market price, and firm and industry profits.

e)

To determine

To show monopoly outcome from part (a) can be reproduced in part (d) by setting n=1 , that the Cournot duopoly outcome from part (b) can be reproduced in part (d) by setting n=2 in pard (d) , and that letting n approach infinity yields the same market price, output and industry profits as in part (c).

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Suppose that firms’ marginal and average costs are constant and equal to c and that inverse market demand is given by P = a – bQ, where a, b > 0 (a) Calculate the profit-maximizing quantity-price combination  and  for a monopolist.   (b) Calculate the Nash equilibrium quantities for Cournot duopolists, which choose quantities  and  for their identical products simultaneously. Also compute market output and market price.   (c) Calculate the perfectly competitive equilibrium price and market output.   (d) Suppose  now  that  there  are n identical  firms  in  a  Cournot model (oligopoly). Compute the Nash equilibrium quantities as functions of n. Also compute market output and market price.   (e) Verify (i) that the monopoly outcome from part (a) can be reproduced in part (d) by setting n = 1;     (ii) that the duopoly outcome from part (b) can be reproduced in part (d) by setting n = 2;                 (iii) that letting n approach infinity yields the same market price and output as…
Suppose that firms’ marginal and average costs are constant and equal to c and that inverse market demand is given by P = a – bQ, where a, b> 0. a. Calculate the profit-maximizing price-quantity combi- nation for a monopolist. Also calculate the monopolist's profit. b. Calculate the Nash equilibrium quantities for Cournot duopolists, which choose quantities for their identical products simultaneously. Also compute market output, market price, and firm and industry profits.
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