Question

1) Two firms, a and b, in a Cournot oligopoly face the inverse
demand function p = 300 – Q. Their cost function is c
(q_{i}) = 25 + 50q_{i} for i = a, b. Calculate the
profit maximizing price output combination. (3)

Answer #1

A monopolist faces the inverse demand function p = 300 – Q.
Their cost function is c (Q) = 25 + 50Q. Calculate the profit
maximizing price output combination

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.

N firms, in a Cournot oligopoly are facing the market demand
given by P = 140 – 0.4Q, where P is the market price and Q is the
market quantity demanded. Each firm has (total) cost of production
given by C(qi) = 200 + 10qi, where qi is the quantity produced by
firm i (for i from 1 to N).
New firms would like to enter the market if they expect to make
non-negative profits in this market; the existing...

The market inverse demand curve is P = 85 – Q.
There are i firms in the market with all firms (plants) that have
cost function
TCi = 20 + qi + qi^2.
Find the market profit for a maximizing multiplant-monopoly
assuming two plants.

Assume that there are 4 firms in a Cournot oligopoly game. Let
qi denote the quantity produced by firm i, and let q =
q1 + q2 + q3 + q4
denote the aggregate quantity on the market. Let P be the market
clearing price and assume that the market inverse demand equation
is P(Q) = 80 – Q. The total cost of each firm i from producing
quantity qi is Ci(qi) =
20qi. The marginal cost, 20, is constant...

Consider two firms who are acting as Cournot duopolists. The
inverse demand function is represented by ? = 100 − (?1 + ?2).
Here, P is the price. ?1 and ?2 are the output levels of Firms 1
and 2.The marginal cost (MC) functions of the two firms are:?? =5
1??2 = 15
Find the profit of the two firms.

Suppose there are n firms in a Cournot oligopoly model.
Let qidenote the quantity produced by firm
i, and let Q = q1 + q2
+…+ qn be the aggregate quantity in the market. Let
P denote the market clearing price and assume that the
inverse market demand is given by P(Q)=a - Q (when
Q<a, else P=0). Assume that the total cost for
firm i of producing quantity qi is
C(qi) = cqi . That
is, there are no...

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...

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?

There is a Cournot duopoly competition between Firm 1 and Firm
2. The inverse demand function is given by P(Q)=100-q, where
Q=q1+q2 and qi denotes the quantity produced by firm i for all iÎ
{1, 2} and the cost function is given by ci(qi)=10qi. Describe this
problem as a normal-form game. Find pure-strategy Nash Equilibria
for both firms.

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