Question

1. Draw a linear market demand curve. Assuming that MC is constant, determine the profit maximizing...

1. Draw a linear market demand curve. Assuming that MC is constant, determine the

profit maximizing output and price for the first firm to enter the market. Now carefully

derive the demand curve for a new entrant who behaves as a Cournot duopolist. What are

that firm's optimal price and output? How will the first firm adjust output and price in

response to the new firm's presence?

2. Identify and briefly discuss five conditions which are conducive to collusion.

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
No scan of handwritten answers 1. A monopolist faces a market demand curve given by Q...
No scan of handwritten answers 1. A monopolist faces a market demand curve given by Q = 53- P. Its cost function is given by C = 5Q + 50, i.e. its MC =$5. (a) Calculate the profit-maximizing price and quantity for this monopolist. Also calculate its optimal profit. (b) Suppose a second firm enters the market. Let q1 be the output of the first firm and q2 be the output of the second. There is no change in market...
Market demand is given by P=14-(q_i+q_e), where is the output of the incumbent frim and is...
Market demand is given by P=14-(q_i+q_e), where is the output of the incumbent frim and is the output of a potential entrant into the market. The incumbent firm’s total cost function is TC=2q_i where as the cost function for the entrant is TC=9+2q_e a)Derive the best response function for each firm b)Calculate the Cournot equilibrium output for each firm c)Estimate the industry output and then find the market clearing price d)Calculate the profit for each firm
5. Let market demand be given by the demand curve Q(p) = 200 ? p ....
5. Let market demand be given by the demand curve Q(p) = 200 ? p . Each firm’s cost function is TC(qi) = 20qi; i =1, 2. (a) Using the Cournot model, find each firm’s output, profit and price. (b) Graph each firm’s best-response function. Show the Cournot equilib- rium. (c) Suppose that the duopolists collude. Find their joint profit maximizing price, output, and profit. Also find each firm’s output and profit. (d) Does each firm have and incentive to...
assume that a monopoly firm has a linear demand curve and a constant marginal cost curve....
assume that a monopoly firm has a linear demand curve and a constant marginal cost curve. Graph this firm's optional output choice before and after a per-unit excise tax is placed on the output. Does the equilibrium price rise by as much as tax?
1. The market demand curve for a duopolistic market is Qd = 30 - P Assume...
1. The market demand curve for a duopolistic market is Qd = 30 - P Assume the MC is zero for both firms a. What are the Cournot reaction curves for each firm? b. What are the profit max price and quantity for each firm?
4.Which statement isincorrect? a.A pure monopolist’s demand curve is the market demand curve. b.A monopoly produces...
4.Which statement isincorrect? a.A pure monopolist’s demand curve is the market demand curve. b.A monopoly produces a product for which there are no close substitutes. c.Marginal revenue is less than price for a monopolist that cannot price discriminate. d.A monopolist’s market position ensures positive economic profits. 5.For a firm with monopoly power that cannot engage in price discrimination: a.the marginal revenue curve lies below the demand curve because any reduction in price applies only to the last unit sold. b.the...
1. Consider a firm whose demand curve is given by Q = 300 – 2P and...
1. Consider a firm whose demand curve is given by Q = 300 – 2P and whose marginal cost is given by   MC = 70 + 3Q . a. determine the profit-maximizing output.    b. determine the profit-maximizing price.    c. suppose that demand increases to Q = 500 – 2P , while marginal cost remains the same.     what happens to the firm’s profit-maximizing price and output? (show your work) d. is this result similar to what would happen...
Suppose there are 2 firms in a market. They face an aggregate demand curve, P=400-.75Q. Each...
Suppose there are 2 firms in a market. They face an aggregate demand curve, P=400-.75Q. Each firm has a Cost Function, TC=750+4q (MC=4). a. If the 2 firms could effectively collude, how much would each firm produce? What is aggregate output? What is price? What are the profits for each firm? Provide a graph illustrating your answer. b. Suppose instead that the firms compete in Quantity (Cournot Competition). Calculate each firm's best-response function using the formulae provided in the book....
Two firms, A and B, are Cournot competitors facing the inverse market demand P = 5...
Two firms, A and B, are Cournot competitors facing the inverse market demand P = 5 - 0.001Q, where Q = qA + qB. Each firm has the same total cost function Ci = 2qi , i = A, B. a. (8) Write out the profit function of firm A, then derive the best response functions for A and B. (You only need to derive one best response function because A and B are identical.) Carefully graph the best response...
1. Consider a monopolist where the market demand curve for the produce is given by P...
1. Consider a monopolist where the market demand curve for the produce is given by P = 520 - 2Q. This monopolist has marginal costs that can be expressed as MC = 100 + 2Q and total costs that can be expressed as TC = 100Q + Q2 + 50. (Does not need to be done. Only here for reference) 2. Suppose this monopolist from Problem #1 is regulated (i.e. forced to behave like a perfect competition firm) and the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT