Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
9th Edition
ISBN: 9781259290619
Author: Michael Baye, Jeff Prince
Publisher: McGraw-Hill Education
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Question
Chapter 9, Problem 2CACQ
(A)
To determine
The reaction function of each firm is to be ascertained.
(B)
To determine
Each firm's equilibrium output is to be calculated.
(C)
To determine
The
(D)
To determine
Each firm's profit in equilibrium is to be ascertained.
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Consider an industry with only two firms: firm A and firm B. The industry’s inverse demand is P(Q) = 400 − 1/10Q where P is the market price and Q is the total industry output. Each firm has a marginal cost of $10. There are no fixed costs and no barriers to exit the market.
Suppose that the two firms engage in Cournot competition. Find the equilibrium price in the industry, the equilibrium outputs, as well as the profits for each firm.
A)
Suppose there are just two firms, 1 and 2, in the oil market and the inverse demand for oil is given by P = 90 – 3Q. The marginal cost for each firm is €18.
Calculate the level of output that each firm would produce at the Cournot equilibrium.
B)
Suppose there are just two firms, 1 and 2, in the oil market and the inverse demand for oil is given by P = 60 – Q. The marginal cost for each firm is €36.
What price should Firm 1 charge at the Cournot equilibrium?
C)
Consider the production function Q = 10KL. Will the MRTS for this production function remain constant along the Q = 200 isoquant? Explain briefly.
Suppose three firms compete in a homogeneous-product Cournot industry. The market elasticity of demand for the product is −2, and each firm’s marginal cost of production is $50. What is the profit-maximizing equilibrium price?
Chapter 9 Solutions
Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
Ch. 9 - Prob. 1CACQCh. 9 - Prob. 2CACQCh. 9 - Prob. 3CACQCh. 9 - Prob. 4CACQCh. 9 - Prob. 5CACQCh. 9 - Prob. 6CACQCh. 9 - Prob. 7CACQCh. 9 - Prob. 8CACQCh. 9 - Prob. 9CACQCh. 9 - Prob. 10CACQ
Ch. 9 - Prob. 11PAACh. 9 - Prob. 12PAACh. 9 - Prob. 13PAACh. 9 - Prob. 14PAACh. 9 - The opening statement on the website of the...Ch. 9 - Prob. 16PAACh. 9 - Prob. 17PAACh. 9 - Prob. 18PAACh. 9 - Prob. 19PAACh. 9 - Prob. 20PAACh. 9 - Prob. 21PAACh. 9 - Prob. 22PAACh. 9 - Prob. 23PAACh. 9 - Prob. 24PAA
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