Question

Suppose two firms are competing in prices (Bertrand) in an industry where demand is P=360-12Q. Assume...

Suppose two firms are competing in prices (Bertrand) in an industry where demand is P=360-12Q. Assume neither firm faces any fixed costs. (a) If both firms have MC=150, what is the equilibrium price? Profits? (b) Suppose Firm 1 has MC1 = 240 and Firm 2 has MC2 = 0. Approximately how much profit does each firm make? (c) Suppose Firm 1 has MC1 = 204 and Firm 2 has MC2 = 96. Approximately how much profit does each firm make?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answers)

If you have any doubts please comment...

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 market with two identical firms. The market demand is P = 26 – 2Q,...
Consider a market with two identical firms. The market demand is P = 26 – 2Q, where Q = q1 + q2. MC1 = MC2 = 2. 1. Solve for output and price with collusion. 2. Solve for the Cournot-Nash equilibrium. 3. Now assume this market has a Stackelberg leader, Firm 1. Solve for the quantity, price, and profit for each firm. 4. Assume there is no product differentiation and the firms follow a Bertrand pricing model. Solve for the...
Suppose there is a perfectly competitive industry in Dubai, where all the firms are identical. All...
Suppose there is a perfectly competitive industry in Dubai, where all the firms are identical. All the firms in the industry sell their products at 20 AED. The market demand for this product is given by the equation: (Total marks = 5) Q = 25 – 0.25P Furthermore, suppose that a representative firm’s total cost is given by the equation: TC = 50 +4Q + 2Q2 What is the inverse demand function for this market? Calculate the MC function? Calculate...
Suppose that an industry consists of two firms. These firms are Bertrand competitors. The inverse market...
Suppose that an industry consists of two firms. These firms are Bertrand competitors. The inverse market demand equation for the output of the industry is P = 33 − 5Q, where Q is measured in thousands of units. Each firm has a marginal cost of $3. Based on this information we can conclude that: P = $1.5 and each firm will sell 6,300 units. P = $5 and each firm will sell 2,800 units. None of the options. P =...
Consider the market for electricity in New York State. Suppose that the demand for electricity is...
Consider the market for electricity in New York State. Suppose that the demand for electricity is given by Q=16-0.2P (P=80-5Q) where Q is measured in billions of kwh and P is measured in cents. The marginal cost of producing electricity in NYS is MC=5+Q. Suppose that there are three firms in this market who are competing on the wholesale market by choosing prices (Bertrand Competition). Firm 1 has a MC=15, Firm 2 has a MC=12, and Firm 3 has a...
Suppose two identical firms are in Bertrand Competition with the following market demand and marginal costs...
Suppose two identical firms are in Bertrand Competition with the following market demand and marginal costs P = 124 − 6Q MC = 4 1 Assuming both firms collude what would the price, quantities and (one period) profits be? 2 Assume both firms are colluding to raise the equilibrium price. If one firm defected from (i.e. broke) their agreement how much would they earn? (Assume the game was played once.) 3 Now assume the game is infinitely repeated and the...
1) Suppose the monopoly has broken up into two separate companies. The demand function is P=105-3Q....
1) Suppose the monopoly has broken up into two separate companies. The demand function is P=105-3Q. The firms do not collude and the firms have identical marginal cost functions (MC1=MC2=40.). Also assume they are Cournot duopolists. Determine the quantity and price of each firm. Quantity for firm 1: ________ Quantity for firm 2: ________ Price in each market: $_________ 2) Now assume these firms are acting like Bertrand duopolists. What quantity will each firm produce and what will be the...
Assume that you observe two firms operating in a Bertrand oligopoly. The inverse demand function for...
Assume that you observe two firms operating in a Bertrand oligopoly. The inverse demand function for the market is P = 200 – 2Q and each firm has the same cost function of C(Q) = 20Q. What is the level of production for each firm, market price, and profit of each firm? What would happen if both firms merge to form a single monopoly with a cost function of C(Q) = 20Q?
Consider a market with only two firms. Demand on this market is given by D(p)= 90...
Consider a market with only two firms. Demand on this market is given by D(p)= 90 - 3p. Initially both firms have the same constant per-unit cost, specifically c1 = c2 = 20 . (a) What is the Nash equilibrium in this market if firms behave as Bertrand competitors? How much does each firm produce, what price do the firms charge, and what are their profits? (b) Now suppose that firm 1 acquires a new production technique that lowers its...
Suppose that market demand for golf balls is described by Q = 90 − 3P, where...
Suppose that market demand for golf balls is described by Q = 90 − 3P, where Q is measured in kilos of balls. There are two firms that supply the market. Firm 1 can produce a kilo of balls at a constant unit cost of $15 whereas firm 2 has a constant unit cost equal to $10. a)Suppose the firms compete in quantities. How much does each firm sell in a Cournot equilibrium? What is the market price and what...
Suppose there are two firms in the market. Let Q1 be the output of the first...
Suppose there are two firms in the market. Let Q1 be the output of the first firm and Q2 be the output of the second. Both firms have the same marginal costs: MC1 = MC2 = $5 and zero fixed costs. The market demand curve is P = 53 − Q. (a) (6 points) Suppose (as in the Cournot model) that each firm chooses its profit-maximizing level of output assuming that its competitor’s output is fixed. Find each firm’s reaction...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT