Question

Consider a duopolistic market in which the market demand curve is ?=90−3? and the marginal cost...

Consider a duopolistic market in which the market demand curve is ?=90−3? and the marginal cost functions of the firms are given by ??1=??2=10.
a. Suppose this market is analyzed using a Cournot model. Determine the output level of each firm and the market price.
b. Suppose this market is analyzed using a Stackelberg model where firm 1 is the leader and firm 2 is the follower. Determine the output level of each firm and the market price.
c. Based on your findings in parts (a) and (b), determine the model that allows firm 1 to have higher profits. Similarly, determine the model that allows firm 2 to have higher profits.

Homework Answers

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
The market demand function is Q=10,000-1,000p. Each firm has a marginal cost of m=$0.16. Firm 1,...
The market demand function is Q=10,000-1,000p. Each firm has a marginal cost of m=$0.16. Firm 1, the leader, acts before Firm 2, the follower. Solve for the Stackelberg-Nash equilibrium quantities, prices, and profits. Compare your solution to the Cournot-Nash equilibrium. The Stackelberg-Nash equilibrium quantities are: q1=___________ units and q2=____________units The Stackelberg-Nash equilibrium price is: p=$_____________ Profits for the firms are profit1=$_______________ and profit2=$_______________ The Cournot-Nash equilibrium quantities are: q1=______________units and q2=______________units The Cournot-Nash equilibrium price is: p=$______________ Profits for the...
Suppose a drug manufacturer sells a new drug for twitchy feet. The market demand curve for...
Suppose a drug manufacturer sells a new drug for twitchy feet. The market demand curve for the drug is P=105-3Q, where P is the market price and Q is the market quantity. Also suppose the marginal cost for manufacturing is 40/ unit. C) Suppose the monopoly has broken up into two separate companies. The demand function is still P=105-3Q as part A. The firms do not collude and the firms have identical marginal cost functions (MC1=MC2=40.). Also assume they are...
Suppose a drug manufacturer sells a new drug for twitchy feet. The market demand curve for...
Suppose a drug manufacturer sells a new drug for twitchy feet. The market demand curve for the drug is P=110-2Q, where P is the market price and Q is the market quantity. Also suppose the marginal cost for manufacturing is 10/ unit. A) Assuming the firm is an unregulated monopolist, what quantity and price should the firm offer? Quantity =. Price = $ B) Now suppose, the manufacturer has identified two separate classifications of cusC) Suppose the monopoly has broken...
Question 4 Consider the following game. Firm 1, the leader, selects an output, q1, after which...
Question 4 Consider the following game. Firm 1, the leader, selects an output, q1, after which firm 2, the follower, observes the choice of q1 and then selects its own output, q2. The resulting price is one satisfying the industry demand curve P = 200 - q1 - q2. Both firms have zero fixed costs and a constant marginal cost of $60. a. Derive the equation for the follower firm’s best response function. Draw this equation on a diagram with...
SCENARIO 3: Consider an industry consisting of two firms producing an identical product. The inverse market...
SCENARIO 3: Consider an industry consisting of two firms producing an identical product. The inverse market demand equation is P = 100 − 2Q. The total cost equations for firms 1 and 2 are TC1 = 4Q1 and TC2 = 4Q2, respectively. 9. Refer to SCENARIO 3. Suppose that the two firms are Cournot rivals. Firm 1’s reaction function is: a. Q1 = 12 − Q2. b. Q1 = 12 − 0.25Q2. c. Q1 = 24 − 0.5Q2. d. Q1...
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...
Suppose a drug manufacturer sells a new drug for twitchy feet. The market demand curve for...
Suppose a drug manufacturer sells a new drug for twitchy feet. The market demand curve for the drug is P=120-4Q, where P is the market price and Q is the market quantity. Also suppose the marginal cost for manufacturing is 20/ unit. A) Assuming the firm is an unregulated monopolist, what quantity and price should the firm offer? Quantity = Price = B) Now suppose, the manufacturer has identified two separate classifications of customers for their twitchy feet product. Because...
24. Cournot duopolists face a market demand curve given by P = 90 - Q where...
24. Cournot duopolists face a market demand curve given by P = 90 - Q where Q is total market demand. Each firm can produce output at a constant marginal cost of 30 per unit. There are no fixed costs. Determine the (1) equilibrium price, (2) quantity, and (3) economic profits for the total market, (4) the consumer surplus, and (5) dead weight loss. 25. If the duopolists in question 24 behave according to the Stackelberg Leader-Follower model, determine the...
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...
The inverse demand for a homogeneous-product Stackelberg duopoly is P = 10,000 -5Q. The cost structures...
The inverse demand for a homogeneous-product Stackelberg duopoly is P = 10,000 -5Q. The cost structures for the leader and the follower, respectively, are CL(QL) = 3,000QL and CF (QF) = 5,000QF.. a. What is the follower’s reaction function? QF = - QL b. Determine the equilibrium output level for both the leader and the follower. Leader output: Follower output:    c. Determine the equilibrium market price. $    d. Determine the profits of the leader and the follower. Leader...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT