1. Consider a Cournot duopoly with the inverse demand P = 260 - 2Q.Two firms compete choosing their quantities. Both firms have constant.marginal and average cost MC = AC = 20.a. Find each firm's best response function.b. Find the Cournot equilibrium.c. Plot the best response curves and illustrate the equilibrium point.

Question: Consider a Cournot duopoly with the inverse demand P = 260-2Q. Two firms compete choosing…

Answered: 1. Consider a Cournot duopoly with the…

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter11: Monopolistic Competition, Oligopoly, And Game Theory

Section: Chapter Questions

Problem 8QP

See similar textbooks

Similar questions

Consider a Cournot duopoly with the inverse demand P = 260 2Q. Two Örms compete choosing their quantities. Both Örms have constant marginal and average cost MC = AC = 20. Find each firms best response function. Find the Cournot equilibrium. c. Plot the best response curves and illustrate the equilibrium point
According to the kinked demand curve theory of oligopoly each firm thinks its demand curve at prices above the existing price is a. less elastic than at prices below the exisiting price since price increases will be matched. b. more elastic than at prices below the exisiting price since price increases will be matched. c. less elastic than at prices below the exisiting price since price increases will not be matched. d. more elastic than at prices below the exisiting price since price increases will not be matched.
3. Two identical firms compete as a Cournot duopoly. The demand they face is P = 100 - 2Q. The cost function for each firm is C(Q) = 4Q. The equilibrium output of each firm is: a) 8 b) 16 c) 32 d) 36 How do I .solve this in detailed steps?
Two firms are competing in a Bertrand setting. The demand and costs equations are: Q1 = 88–4P1+2P2, Q2 = 88–4P2+2P1; MC1 = 9; and MC2 = 10. The firms agreed to collude. But firm 1 sets a P-Duopoly. Instructions: Use no decimals. a. Under these conditions, P1 = $ P2 = $ b. Calculate each firm's equilibrium output. Q1 = Q2 = c. Calculate the profit each firm earns in equilibrium. Firm 1: $ Firm 2: $ d. In this case, A. Firm 1 was exposed to deception, and should have entered the market with P-Monopoly. B. Firm 2 was exposed to deception, and should have entered the market with P-Monopoly. C. Firm 2 was exposed to deception, and should have entered the market with P-Duopoly. D. Firm 1 was dishonest, and soon will be ostracized by the industry.
1. Best responses in a Cournot Oligopoly Firm A and Firm B sell identical goods Total market demand for the good is: The inverse demand function is therefore 1 P(QM) = 780 -Q=780 -0.02222QM 45 QM is total market production (i.e., combined production of firm's A and B. That is: Q(P) = 35, 100- 45P 2M = A +QB As a result, the inverse demand curve for each firm is: P(QA, QB) = 780- -1/32₁-752 45 Unlike the example in class, the two firms have different costs. = 4000A TCA (QA) TCB (QB) = 260QB = 780 -0.022220A -0.02222QB a. Using the demand function and the cost functions above, what is firm A's profit function. b. Using the profit function above and assuming that firm B produces Qg, calculate what firm A's best response is to firm B’s decision to produce QB- Note: Firm A's best response should be a function of B
The market for smartphones is an Oligopoly market. Illustrate how equilibrium price and quantity is determined in this market.
Help me please
Only two firms, ABC and MNO, sell a particular product. The following table shows the demand curve for their product. Each firm has the same constant marginal cost of $4 and zero fixed cost. Quantity Demanded (Units) 0 5 10 15 20 25 Price (Dollars per unit) 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 30 35 40 45 50 55 60 65 70 Total Revenue (Dollars) 0 65 120 165 200 225 240 245 240 225 200 165 120 65 0 Total Cost (Dollars) 0 20 40 60 80 100 120 140 160 180 200 220 240 260 280 Refer to the table above and explain: A). If ABC and MNO operate to jointly maximize profits, then what is the price? $9 B). If ABC and MNO operate to jointly maximize profits, then what quantity is sold? 25 I Profit (Dollars) 0 45 80 105 120 125 120 105 80 45 0 -55 -120 -195 -280 C). If ABC and MNO operate to jointly maximize profits and agree to share the profit equally, then how much profit will each of them earn? $62.5 D). ABC and MNO agree to maximize joint profits. However, while ABC produces the agreed-upon amount,…
In this assignment, we’re assuming you’re a manager of different types of buffalo wing restaurants. I’ll give different scenarios- some will require math and others will require writing. Cournot Oligopoly 2. Now, assume your buffalo wing firm is in a Cournot oligopoly with 3 additional firms. The market elasticity of demand for buffalo wings is -0.70. Find your firm’s elasticity of demand. Now find the profit-maximizing price for your firm if your marginal cost is $3.70.
A small town has a duopoly in its tattoo market. Two firms, "Thread the Needle" and "Ink about it" are both competitors. Daily profit is listed in the payoff matrix. The green payouts belong to "Thread the Needle" and the red, "Ink about it". Why does the outcome where they both advertise yield the same profits for both firms than if they didn't advertise? A because advertising doesn't actually work B because advertising increases the average total costs and negatively impact total profit C because one firm is larger than the other firm D because of a collusive agreement between the firms
The following integrated series of questions relates to several sections in the text. Scenario 2: Suppose a stream is discovered whose water has remarkable healing powers. You decide to bottle the liquid and sell it. The market demand curve is linear and is given as follows: P = 30 -Q The marginal cost to produce this new drink is $3. Refer to Scenario 2. What will be the price of this new drink in the long run if the industry is a Cournot duopoly? A. $3 В. $9 C. $13.50 D. $12 E. None of the above
Figure 1.7 represents an oligopoly firm. The existing price and quantity are $10 and 2000 units. The firm's demand curve will be... PRICE (S) Figure 1.7 D2 DI a. D₁ED₁ b. D2ED2 c. D₁ED2 d. D₂ED1 2000 QUANTITY D2

SEE MORE QUESTIONS

Recommended textbooks for you

Microeconomics

Economics

ISBN:

9781337617406

Author:

Roger A. Arnold

Publisher:

Cengage Learning

Economics (MindTap Course List)

Economics

ISBN:

9781337617383

Author:

Roger A. Arnold

Publisher:

Cengage Learning

Economics For Today

Economics

ISBN:

9781337613040

Author:

Tucker

Publisher:

Cengage Learning

Microeconomics

Economics

ISBN:

9781337617406

Author:

Roger A. Arnold

Publisher:

Cengage Learning

Economics (MindTap Course List)

Economics

ISBN:

9781337617383

Author:

Roger A. Arnold

Publisher:

Cengage Learning

Economics For Today

Economics

ISBN:

9781337613040

Author:

Tucker

Publisher:

Cengage Learning

Micro Economics For Today

Economics

ISBN:

9781337613064

Author:

Tucker, Irvin B.

Publisher:

Cengage,

Economics: Private and Public Choice (MindTap Cou…

Economics

ISBN:

9781305506725

Author:

James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:

Cengage Learning

Microeconomics: Private and Public Choice (MindTa…

Economics

ISBN:

9781305506893

Author:

James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS