Question

In a certain town, everyone spends a constant amount of money on sweets, whatever its price....

In a certain town, everyone spends a constant amount of money on sweets,
whatever its price. The goodies are produced at an average cost
constant to n equal companies. Show that if a> 0 then
there is a Cournot equilibrium, but if a = 0 then there is no such equilibrium.

Homework Answers

Answer #1

This show the fixed or constant demand of consumers for a particular good or a commodity i.e. they regard sweets as necessary or basic good so there is no effect on demand for the increase or decrease in price.

When goods are produced with average cost which is the total cost per unit of the output and marginal cost is the extra cost which is incurred when an additional unit of a product is produced.

As one of the assumptions of Cournot model is output is fixed so the firms will try take active participation in the production function so dividing the output among them when a>0 so there is an equilibrium but when a=0 there is no such equilibrium as there is single producer in the market making monopoly.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
In a certain town, everyone spends a constant amount of money on sweets, whatever its price....
In a certain town, everyone spends a constant amount of money on sweets, whatever its price. The sweets are produced at an average cost constant by n equal companies. Show that if a> 0 then there is a Cournot equilibrium, but if a = 0 then there is no such equilibrium.
1. All else constant, an increase in the price of labor would cause the total amount...
1. All else constant, an increase in the price of labor would cause the total amount of output that can be produced with a fixed amount of spending to ________. This would result in a movement to a ________ isoquant. increase; lower decrease; lower decrease; higher increase; higher 2. All of the following are strategies a firm with market power can adopt to increase it profits over time  except: setting price equal to the marginal costs of production. erecting barriers to...
1. A monopolist is currently selling at a price of $5 with constant ATC equal to...
1. A monopolist is currently selling at a price of $5 with constant ATC equal to $3. If quantity demanded increases by three units for each one cent reduction in the price, the welfare (efficiency) loss due to monopoly is:   A. $1,600 B. $2,000 C. $900 D. $600 E. $6,000 2. If elasticity of demand is LESS than ONE where a certain monopolist is currently operating then:   A. it should increase production B. the Marginal Revenue curve must be rising...
Table 11-1 14. Consider the town of Springfield with only three residents, Sophia, Amber, and Cedric....
Table 11-1 14. Consider the town of Springfield with only three residents, Sophia, Amber, and Cedric. The three residents are trying to determine how large, in acres, they should build the public park. The table below shows each resident’s willingness to pay for each acre of the park. Acres Sophia Amber Cedric 1 $10 $24 $6 2 8 18 5 3 6 14 4 4 3 8 3 5 1 6 2 6 0 4 1 7 0 2 0...
32. If the company E-bikes R US is a price taker, then its marginal revenue will...
32. If the company E-bikes R US is a price taker, then its marginal revenue will always equal A) price. B) total cost. C) zero. D) one. 33. The company E-bikes R US operates in a competitive market. If E-bikes R US is in short-run equilibrium, then A) profits equal zero. B) it will not operate at a loss. C) an increase in its fixed cost will have no effect on profit. D) an increase in its fixed cost will...
Problem 21-01A National Corporation needs to set a target price for its newly designed product M14–M16....
Problem 21-01A National Corporation needs to set a target price for its newly designed product M14–M16. The following data relate to this new product. Per Unit Total Direct materials $22 Direct labor $38 Variable manufacturing overhead $11 Fixed manufacturing overhead $1,215,000 Variable selling and administrative expenses $ 9 Fixed selling and administrative expenses $ 1,215,000 These costs are based on a budgeted volume of 81,000 units produced and sold each year. National uses cost-plus pricing methods to set its target...
The Once-ler produces Thneeds (which everyone needs) in a factory that also produces pollution. The more...
The Once-ler produces Thneeds (which everyone needs) in a factory that also produces pollution. The more pollution the Once-ler produces, the lower his production costs, with the marginal benefit of x to the Once-ler equal to MBx = 50–2x, where x is the amount of pollution produced. This pollution harms the local population of Brown Bar-Ba-Loots according to the following marginal cost function: MCx = 20+3x. The Twoce-ler enters the market for Thneeds and opens a second factory that competes...
37) Price per Constant- Quality of X Quantity of X Demanded per Time Period Quantity of...
37) Price per Constant- Quality of X Quantity of X Demanded per Time Period Quantity of X Supplied per Time Period $10 0 150 8 20 120 6 40 90 4 60 60 2 80 30 0 100 0 Based on the table above, if other influences remain constant and the market is free to adjust, a stable equilibrium price will be established at Select one: a. $4. b. $6. c. $8. d. $2. A shortage will occur when Select...
1. Consider an economy that produces and consumes bread and automobiles. In the table below are...
1. Consider an economy that produces and consumes bread and automobiles. In the table below are data for two different years: Year 2010 Year 2025 Price of an automobile $50,000 $60,000 Price of a loaf of bread $10 $20 Number of automobiles produced 100 120 Number of loaves of bread produced 500,000 400,000 Using the year 2010 as the base year, compute the following: nominal GDP, implicit price deflator and the CPI. 2. Assume that GDP (Y) is 5,000. Consumption...
Answer the following and state your reasoning for each answer. 1) If marginal cost is constant,...
Answer the following and state your reasoning for each answer. 1) If marginal cost is constant, what happens to a market if it evolves from perfect competition to monopoly without any change in the position of the market demand curve or any change in costs? A consumer surplus increases, producer surplus increases, and deadweight loss is not created. B consumer surplus decreases, producer surplus decreases, and deadweight loss is created. C consumer surplus increases, producer surplus decreases, and deadweight loss...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT