Consider a Cournot duopoly, the firms face an (inverse) demand function: Pb = 530 - 17 Qb.The marginal cost for firm 1 is given by mc1 = 12 Q.The marginal cost for firm 2 is given by mc2 = 9 Q. (Assume firm 1 has a fixed cost of $ 157 and firm 2 has a fixed cost of $ 113 .) What is level of total surplus in the duopoly equilibrium ? Answer: 5843.43
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Consider a Cournot duopoly, the firms face an (inverse) demand function: Pb = 530 - 17 Qb.
The marginal cost for firm 1 is given by mc1 = 12 Q.
The marginal cost for firm 2 is given by mc2 = 9 Q.
(Assume firm 1 has a fixed cost of $ 157 and firm 2 has a fixed cost of $ 113 .)
What is level of total surplus in the duopoly equilibrium ? Answer: 5843.43
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- Economics Question #6: Consider a Cournot duopoly, the firms face an (inverse) demand function: Pb = 432 - 7 Qb. The marginal cost for firm 1 is given by mc1 = 8 Q. The marginal cost for firm 2 is given by mc2 = 5 Q.(Assume firm 1 has a fixed cost of $ 90 and firm 2 has a fixed cost of $ 103 .)What is level of total surplus in the duopoly equilibrium ? hint: 8597.86> Question #21: Consider a Leader-Follower duopoly, the firms face an (inverse) demand function: Pb =618 - 25 Qb. The marginal cost for firm 1 (The Leader) is given by mcl = 18 Q. The marginal cost for firm 2 (The Follower) is given by mc2 = 8 Q. How much consumer surplus is created by industry transactions ? (Assume firm 1 has a fixed cost ofS 415 and firm 2 has a fixed cost of S 608 ) • Question #22: Consider a Leader-Follower duopoly, the firms face an (inverse) demand function: Pb = 618 - 25 Qb. The marginal cost for firm 1 (The Leader) is given by mcl = 18 Q. The marginal cost for firm 2 (The Follower) is given by mc2 = 8 Q. How much DWL is created by the Leader-Follower industry structure ? (Assume firm 1 has a fixed cost of $ 415 and firm 2 has a fixed cost of $ 608 .) • Question #23: Consider a Leader-Follower duopoly, the firms face an (inverse) demand function: Pb = 618 - 25 Qb. The marginal cost for firm 1 (The Leader) is given by mcl = 18 Q. The marginal cost for firm 2…Suppose a market is served by two firms (a duopoly). The market demand function given by P = 1200 - Q_{1} - Q_{2} where Q_{1} is the output produced by firm and Q_{2} is the output produced by firm 2 . Firm cost of production is given by the function C(Q_{t}) = 120Q_{t} and firm 2's cost of production is given by the function C(Q_{2}) = 120Q_{2} The average cost of firm 1 is given by A*C_{1} = 120 and the average cost of firm 2 is given by A*C_{2} = 120 Marginal profit function for firm 1: Delta pi 1 Delta Q 1 equiv1080-2Q 1 -Q 2; (d*pi_{2})/(Delta*Q_{2}) = 1080 - Q_{1} - 2Q_{2} Marginal profit function for firm 2: What will be the equilibrium profit levels earned by the Stackelberg leader firm and the Stackelberg follower firm?
- There are two firms selling differentiated products. Firm A faces the following demand for his product: QA=20-1/2PA+1/4PB Firm B faces the following demand: QB=220-1/2PB+1/4PA PA represents the price set by firm A. PB represents the price set by firm B.Assume that the marginal cost is zero both for firm A and firm B.What are the equilibrium prices of a simultaneous price competition?What would the equilibrium prices be if A is the leader and B is the follower?Question 3:Suppose the inverse demand for a good is given by P = 50 – 4Q, where Q is the totalquantity supplied by all firms in the market. Suppose each firm in the market has a constantmarginal cost of 18.Q3 a) Assume the market consists of two firms that set their quantities simultaneously.Calculate the duopoly levels of production and the equilibrium price. Q3 b) Now assume firm 1 chooses its production level before firm 2 does. What will be theequilibrium quantities, price and profits in this case?Q3 c) Now instead suppose that the two firms compete over prices rather than quantities.What will be the equilibrium price and profits of firms 1 and 2 in this case? Finally, if firm 1manages to lower its marginal cost to 14, what will be the new equilibrium price, quantitiesand profits?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.
- Problem 3. Firm 1, Firm 2 and Firm 3 are the only competitors in a market for a good. The price in the market is given by the inverse demand equation P=10 (Q1+Q2+Q3) where Q, is the output of Firm i (i=1,2,3). Firm 1's total cost function is C₁ = 4Q₁+1, Firm 2's total cost function is C₂ = 2Q2 +3, and Firm 3's total cost function is C3 = 3Q3 + 2. Each firm wants to maximize its profits and they simultaneously choose their quantities. Determine a Nash equilibrium in this market.Two firms compete on price every year. The inverse demand function each firm faces depends on which firm has chosen the lowest price that year. The one that did captures the entire market. If, on the other hand, both prices are the same then they split the market evenly. Consumers round up prices to the nearest integer. For the firm with the lowest price p, demand is given by: q = 24-2p: Marginal costs are constant and equal to $4 for both firms. a. Define the Normal form of the stage game and determine the Nash Equilibria, the Cooperative Equilibrium and the Optimal Deviation from cooperation. b. For the once repeated (2 stages) game, determine if a Nash Equilibrium exists that improves on simply playing the (better) Nash Equilibrium of the stage game twice c. For the infinitely repeated game, determine what the interest rate would have to be to prevent the firms from cooperating. d*. Determine the relation between the interest rate and the number of punishment periods in a…• Question #21: Consider a Leader-Follower duopoly, the firms face an (inverse) demand function: Pb = 141 - 3 Qb. The marginal cost for firm 1 (The Leader) is given by mc1 = 8 Q. The marginal cost for firm 2 (The Follower) is given by mc2 = 2 Q. %3D How much consumer surplus is created by industry transactions ? (Assume firm 1 has a fixed cost of $ 154 and firm 2 has a fixed cost of $ 439 .) • Question #22: Consider a Leader-Follower duopoly, the firms face an (inverse) demand function: Pb = 141 - 3 Qb. The marginal cost for firm 1 (The Leader) is given by mc1 = 8 Q. The marginal cost for firm 2 (The Follower) is given by mc2 = 2 Q. How much DWL is created by the Leader-Follower industry structure ? (Assume firm 1 has a fixed cost of $ 154 and firm 2 has a fixed cost of $ 439 .)
- The inverse market demand for fax paper is given by P=100-Q. There are two firms who produce fax paper. Firm 1 has a cost of production of C1= 15*Q1 and firm 2 has a cost of production of C2=20*Q2 a) Suppose firm 1 and firm 2 compute simultaneously in quantities. What are the Cournot quantities and prices?What are the profits of firm 1 and 2?b) Suppose firm 1 and firm 2 compete simultaneously in prices. What are the Bertrand quantities and prices?What are the profits of firm 1 and 2?Suppose the inverse demand for a particular good is given by P = 1200-12Q. Furthermore, there are only two firms, A and B. Firm A's marginal cost is a constant $25, and Firm B's marginal cost is a constant $20. Assume these two firms engage in Cournot competition. If we assume that the firm with the lowest costs could supply the entire market, then the deadweight loss due to the market power these two firms exert through Cournot competition equals $. 4 [Round your answer to the nearest two decimals.]Suppose a market is served by two firms (a duopoly) The market demand function given by P = 1200 - O_{1} - O_{2} where is the output produced by firm 1 and is the output produced by firm 2 Q_{1}*Q_{2} Firm I's cost of production is given by the function C(Q_{1}) = 120Q_{1} and firm 2's cost of production is given by the function C(Q_{2}) = 120Q_{2} The average cost of firm is given by A*C_{1} = 120 and the average cost of firm 2 is given by A*C_{2} = 120 Marginal profit function for firm 1 (d*pi_{1})/(Delta*Q_{1}) = 1080 - 2Q_{1} - Q_{2} Marginal profit function for firm 2 (Delta*pi_{2})/(Delta*Q_{2}) = 1080 - Q_{1} - 2Q_{2} What will be the equilibrium profit levels earned by the stackelberg leader firm and the stackelberg follower firm?