Question

Two identical firms compete as a Cournet duopoly.

The inverse market demand they face is P = 15 – 2Q.

The cost function for each firm is C(q) = 6Q.

Each firm will earn equilibrium profits of

Answer #1

Two identical firms compete as a Cournot duopoly. The inverse
market demand they face is P = 128 - 4Q. The cost function for each
firm is C(Q) = 8Q. The price charged in this market will be
a. $32.
b. $48.
c. $12.
d. $56.

Two firms compete as a Stackelberg duopoly. Firm 1 is the market
leader. The inverse market demand they face is P = 62 - 2Q, where
Q=Q1+Q2. The cost function for each firm is C(Q) = 6Q. Given that
firm 2's reaction function is given by Q2 = 14 - 0.5Q1, the optimal
outputs of the two firms are:
a. QL = 9.33; QF = 9.33.
b. QL = 14; QF = 7.
c. QL = 6; QF = 3....

Two firms compete in a market with inverse demand P = 120 − Q.
Firm 1 has cost function C(q1) = 20q1 and Firm 2 has cost function
C(q2) = 10q2. Solve for the Bertrand equilibrium in which firms
choose price simultaneously.

Two firms, a and b, compete in a market to sell homogeneous
products with inverse demand function P = 400 – 2Q where Q = Qa +
Qb. Firm a has the cost function Ca = 100 + 15Qa and firm b has the
cost function Cb = 100 + 15Qb. Use this information to compare the
output levels, price, and profits in settings characterized by the
following markets:
a, Cournot
b, Stackelberg
c, Bertrand
d, Collusion

Two firms, a and b, compete in a market to sell homogeneous
products with inverse demand function P = 400 – 2Q where Q =
Qa + Qb. Firm a has the cost function
Ca = 100 + 15Qa and firm b has the cost
function Cb = 100 + 15Qb. Use this
information to compare the output levels, price and profits in
settings characterized by the following markets:
Cournot
Stackelberg
Bertrand
Collusion

Consider two identical firms competing in a market described
by:
• (Inverse) Demand: P = 50 − Q , where Q = q1 + q2
• Cost Firm 1: C1 = 20q1 +q1^2
• Cost Firm 2: C2 = 20q2 + q2^2
a. (1 point) What is firm 1’s marginal cost? Firm 2’s marginal
cost? What can you observe about these two firms?
b.(2 points) What are the equilibrium price (P∗), production
quantities (q∗1,q∗2), and profits(π∗1,π∗2), if these firms are...

Four firms compete a la Cournot in a market where inverse demand
is given by P = 90 − 2Q. Suppose 3 high-cost firms have constant
marginal cost of 20, while one low-cost firm has marginal cost of
10. Find the Nash equilibrium output for each firm where the
high-cost firms each produce the same level of output.

In a duopoly market with two identical firms, the market demand
curve is: P=95-5Q And the marginal cost and average cost of each
firm is constant: AC=MC=5 If each firm sets quantity at the same
time:
Now assume that firm 1 in this market gets to act first
(Stackelberg model).
A) How much will firm 1 produce?
B) How much will firm 2 produce?
C) What will be the total Q and market P for this market?
D) What is...

Consider two identical firms competing in a market described
by:
• (Inverse) Demand: P = 50 − Q , where Q = q1 + q2
• Cost Firm 1: C1 = 20q1 +q1^2
• Cost Firm 2: C2 = 20q2 + q2^2
a. (1 point) What is firm 1’s marginal cost? Firm 2’s marginal
cost? What can you observe about these two firms?
b.(2 points) What are the equilibrium price (P∗), production
quantities (q∗1,q∗2), and profits(π∗1,π∗2), if these firms are...

Two firms compete in a Bertrand setting for homogeneous
products. The market demand curve is given by Q = 100 – P, where Q
is quantity demanded and P is price. The cost function for firm 1
is given by C(Q) = 10Q and the cost function for firm 2 is given by
C(Q) = 4Q. What is the Nash-Equilibrium price? What are the profits
for each firm in equilibrium?

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