Question

Fill in the blanks. Consider two firms facing the demand curve: P=60-5Q where Q=Q1+Q2. The firm's...

Fill in the blanks.
Consider two firms facing the demand curve: P=60-5Q

where Q=Q1+Q2. The firm's cost functions are

C1(Q1)=15+10Q1 and C2(Q2)=15+20Q2

Combined, the firms will produce __ units of output, of which firm 1 will produce __ units and firm 2 will produce __ units.

If the firms compete, then firm 1 will produce __ units of output and firm 2 will produce __ units of output.

Draw the firms' reaction curves and sho the equilibrium. Then, indicate the Cournot Equilibrium.

How much should firm 1 be willing to pay to purchase Firm 2 if collusion is illegal but a takeover is not?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Consider a duopoly with two firms with the cost functions: Firm 1: C1(q1)=5q1 Firm 2: C2(q2)=5q2...
Consider a duopoly with two firms with the cost functions: Firm 1: C1(q1)=5q1 Firm 2: C2(q2)=5q2 The firms compete in a market with inverse demand p = 300 - 8Q where Q=q1+q2. The firms compete in a Cournot fashion by choosing output simultaneously.   What is the Nash-Cournot equilibrium output of firm 1? Round to nearest .1
Consider a Cournot market with two firms that have TC(Q) =5Q. Demand is given by P=...
Consider a Cournot market with two firms that have TC(Q) =5Q. Demand is given by P= 200−2(Q1+Q2). A) Find firm 1’s profit as a function of Q1 and Q2 B) Find the equilibrium price, quantity sold by each firm, and profit for each firm.
Q1. Consider a Cournot oligopoly in which the market demand curve is Q = 60 -...
Q1. Consider a Cournot oligopoly in which the market demand curve is Q = 60 - P. There are two firms in this market, so Q = q1 + q2. The firms in this market are not identical: Firm 1 faces cost function c1(q1) = 2q12, while firm 2's cost function is c2(q2) = 28q2. In the space below, write down a function for Firm 1's profit, in terms of q1 and q2. Q2. Refer back to the Cournot oligopoly...
The inverse market demand in a homogeneous-product Cournot duopoly is P = 154 – 3(Q1 +...
The inverse market demand in a homogeneous-product Cournot duopoly is P = 154 – 3(Q1 + Q2) and costs are Company 1,  C1(Q1) = 10Q1 and Company 2 C2(Q2) = 18Q2. Calculate the equilibrium output for Company 2 Round all calculations to 1 decimal
Consider three firms that face market demand P = 101 - Q. The cost functions are...
Consider three firms that face market demand P = 101 - Q. The cost functions are C1(q1)=6(q1^2) for firm 1, C2(q2)=4(q2^2) for firm 2, and C3(q3)=4q(3^2) for firm 3. Firm 1 is the Stackelberg leader and firms 2 and 3 are the followers. What is firm 1's equilibrium output q1^*?
Consider a two-firm oligopoly facing a market inverse demand curve of P = 100 – 2Q,...
Consider a two-firm oligopoly facing a market inverse demand curve of P = 100 – 2Q, where Q is the sum of q1 and q2. q1 is the output of Firm 1 and q2 is the output of Firm 2. Firm 1's marginal cost is constant at $12, while Firm 2's marginal cost is constant at $20. Answer the following questions, assuming that the firms are Cournot competitors. a. How much output does each firm produce? (answer is q1 =...
Consider two identical firms competing in a market described by: • (Inverse) Demand: P = 50...
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...
The inverse market demand in a homogeneous-product Cournot duopoly is P = 200 – 3(Q1 +...
The inverse market demand in a homogeneous-product Cournot duopoly is P = 200 – 3(Q1 + Q2) and costs are C1(Q1) = 26Q1 and C2(Q2) = 32Q2. a. Determine the reaction function for each firm. Firm 1: Q1 =  -  Q2 Firm 2: Q2 =  -  Q1 b. Calculate each firm’s equilibrium output. Firm 1: Firm 2: c. Calculate the equilibrium market price. $ d. Calculate the profit each firm earns in equilibrium. Firm 1: $ Firm 2: $
Consider two identical firms competing in a market described by: • (Inverse) Demand: P = 50...
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...
Consider the Cournot duopoly model where the inverse demand is P(Q) = a – Q but...
Consider the Cournot duopoly model where the inverse demand is P(Q) = a – Q but firms have asymmetric marginal costs: c1 for firm 1 and c2 for firm 2. What is the Nash equilibrium if 0 < ci < a/2 for each firm? What if c1 < c2 < a, but 2c2 > a + c1?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT