Mindtap Economics, 1 Term (6 Months) Printed Access Card For Arnold's Macroeconomics, 13th
13th Edition
ISBN: 9781337621397
Author: Arnold, Roger A.
Publisher: Cengage Learning
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Chapter 15, Problem 17QP
To determine
The changes in velocity and the
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2. a) Consider a market where one firm (firm 1) currently produces, but a second firm (firm 2) is intending to enter and sell an identical product. The market has inverse demand given by p = 40 – Q, where Q is the total output sold in the market. Firm 1 has a marginal cost of 16 and firm 2 has a marginal cost of c < 16, with no fixed cost for either firm. Firm 2 has a choice of competing on price or quantity, with firms making their choices simultaneously (i.e. the market will be either a Bertrand or Cournot duopoly). If you were advising firm 2 on entering this market, how would you advise it to compete? To what extent would the size of firm 2’s cost advantage affect your advice?
b) Now assume that firm 2 is aware that other firms are considering entering the market, so the market may over time change from a duopoly to an oligopoly with more than two firms. This would not change the nature of competition (i.e. any additional firms would set price or quantity in line with the first…
1. Consider two firms (i=1,2) interacting in the market. Assume that firms compete in
quantities and therefore they choose either to cooperate or not in each round. If a firm
deviates it earns monopoly profit for a round and a punishment phase will follow from next
round onwards (for ever) where both firms choose the Cournot quantity. Assume a
discounting factor & and that firms meet in the market in every period. The demand facing
the industry is p = 1 92. Let Q = q1 + 92 denote the aggregate industry output
-
91
-
level. Assume further that production is costless.
Q4 (30 points)
Subsidy in Auctions
Consider a sealed-bid second-price auction with two bidders. Valuation of bidder 1 is drawn
from the uniform distribution on [0, 100], and valuation of bidder 2 is independently drawn
from the uniform distribution on [0, 300].
Chapter 15 Solutions
Mindtap Economics, 1 Term (6 Months) Printed Access Card For Arnold's Macroeconomics, 13th
Ch. 15.1 - Prob. 1STCh. 15.1 - Prob. 2STCh. 15.1 - Prob. 3STCh. 15.4 - Prob. 1STCh. 15.4 - Prob. 2STCh. 15.4 - Prob. 3STCh. 15 - Prob. 1QPCh. 15 - Prob. 2QPCh. 15 - Prob. 3QPCh. 15 - Prob. 4QP
Ch. 15 - Prob. 5QPCh. 15 - Prob. 6QPCh. 15 - Prob. 7QPCh. 15 - Prob. 8QPCh. 15 - Prob. 9QPCh. 15 - Prob. 10QPCh. 15 - Prob. 11QPCh. 15 - Prob. 12QPCh. 15 - Prob. 13QPCh. 15 - Prob. 14QPCh. 15 - Prob. 15QPCh. 15 - Prob. 16QPCh. 15 - Prob. 17QPCh. 15 - Prob. 18QPCh. 15 - Prob. 1WNGCh. 15 - Prob. 2WNGCh. 15 - Prob. 3WNGCh. 15 - Prob. 4WNGCh. 15 - Prob. 5WNGCh. 15 - Graphically portray the Keynesian transmission...Ch. 15 - Prob. 7WNGCh. 15 - Prob. 8WNG
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- Figure: Demand 3 If the two-firm oligopoly facing the market in this diagram is currently producing at the competitive output level and one of the firm reduces output by 4 units, the firms' profits would increase from 564596. O50524 50 to $48 O532 548arrow_forwardCan you show me how to do part d?arrow_forwardProblem Set#8 Part I You are the manager of a firm producing a good in a particular market environment. The following table details the price charged (P) and the total cost (TC) incurred by your firm at various production levels (Q). Price (P) $125 Quantity (Q) Total Cost (TC) 0 150 125 1 175 125 2 210 125 3 255 125 4 310 125 5 375 125 6 450 125 7 535 125 8 630 125 9 735 125 10 850 125 11 975 125 12 1,110 125 13 1,255 125 14 1,410 125 15 1,575 1. Based on the information provided in the table above, identify the type of market structure in which the firm operates. Explain your reasoning! 2. Add seven columns to the table above, one for each of the following variables: AFC, ATC, VC, AVC, MC, TR, and MRarrow_forward
- The table below presents the demand schedule and marginal costs facing a monopolist producer. a. Fill in the total revenue and marginal revenue columns. Instructions: Enter your answers as a whole number. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Leave no cells blank. Enter 0 if appropriate. Q 0 P ($) 8 TR ($) 0 MR ($) MC ($) 1 7 2 6 3 5 1 2 3 4 4 4 5 5 3 6 6 2 7 1 8 0 b. What is the profit-maximizing level of output? units c. What price will the monopolist charge to maximize profits? $ 7 8arrow_forwardnot use ai pleasearrow_forward1. Lisa has $48 per week set aside for coffees (x) and lunches (z). The price of coffee is $4 and lunches are $6. What is Lisa's budget line equation (with z on the left-hand side)? Graph the budget line, and show how it changes when the price of lunches rise to $8 (including intercepts). What is the new budget line equation? 2. Suppose utility for a consumer of movies (x) and golf (z) is U = 20x0.420.5. The consumer has set aside $1000 to consumer movies and golf for a year. a. If the price of movies is $20 and the price of golf is $40, what is the utility-maximizing consumption of movies and golf? b. Show the optimal consumption bundle on a graph, showing a budget line (with intercepts), a tangent indifference curve, and the optimal choice. 3. Sam has set aside $480 for entertainment this month, which is golf (x) and/or bowling (z). A round of golf is $40 and a night of bowling is $30. His utility function is U = 3x + 2z. a. What is his MRS? b. Solve for the optimal choice of golf…arrow_forward
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