Assume that two companies (C and D) are duopolists that produce identical products. Demand for the products is given by the following linear demand function: P = 600 – Qc - Qp where Qc and Op are the quantities sold by the respective firms and P is the selling price. Total cost functions for the two companies are TCc = 25,000 + 100Qc TCp = 20,000 + 125QD Assume that the firms act independently as in the Cournot model (i.e., each firm assumes that the other firm's output will not change). For Company C, the long-run equilibrium output is , and the selling price is For Company D, the long-run equilibrium output is , and the selling price is $ At the equilibrium output, Company C earns total profits of $ |, and Company D earns total profits of $

Assume that two companies (C and D) are duopolists that produce identical products. Demand for the products is given by the following linear demand function: P = 600 – Qc - Qp where Qc and Op are the quantities sold by the respective firms and P is the selling price. Total cost functions for the two companies are TCc = 25,000 + 100Qc TCp = 20,000 + 125QD Assume that the firms act independently as in the Cournot model (i.e., each firm assumes that the other firm's output will not change). For Company C, the long-run equilibrium output is , and the selling price is For Company D, the long-run equilibrium output is , and the selling price is $ At the equilibrium output, Company C earns total profits of $ |, and Company D earns total profits of $

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter12: Price And Output Determination: Oligopoly

Section: Chapter Questions

Problem 2E

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Assume that two companies (C and D) are duopolists that produce identical products. Demand for the products is given by the following linear demand function:P = 600 - QC - QDwhere QC and QD are the quantities sold by the respective firms and P is the selling price. Total cost functions for the two companies areTCC = 25000 + 100QCTCD = 20000 + 125QDAssume that the firms act independently as in the Cournot model (i.e., each firm assumes that the other firm’s output will not change).a. Determine the long-run equilibrium output and selling price for each firm.b. Determine the total profits for each firm at the equilibrium output found in Part (a).
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Assume that two companies (A and B) are duopolists who produce identical products. Demand for the products is given by the following linear demand function: P=400−QA−QBP=400−QA−QB where QAQA and QBQB are the quantities sold by the respective firms and P is the selling price. Total cost functions for the two companies are TCA=1,500+110QA+QA2TCA=1,500+110QA+QA2 TCB=1,200+40QB+2QB2TCB=1,200+40QB+2QB2 Assume that the firms form a cartel to act as a monopolist and maximize total industry profits (sum of Firm A and Firm B profits). In such a case, Company A will produce units and sell at .Similarly, Company B will produce units and sell at . At the optimum output levels, Company A earns total profits of and Company B earns total profits of . Therefore, the total industry profits are . At the optimum output levels, the marginal cost of Company A is and the marginal cost of Company B is . The following table shows the long-run equilibrium if the firms act independently, as in…
Assume that two companies (A and B) are duopolists who produce identical products. Demand for the products is given by the following linear demand function: P=200− Q A − Q B where Q A and Q B are the quantities sold by the respective firms and P is the selling price. Total cost functions for the two companies are TC A =1,500+55 Q A + Q A 2 TC B =1,200+20 Q B +2 Q B 2 Assume that the firms form a cartel to act as a monopolist and maximize total industry profits (sum of Firm A and Firm B profits). In such a case, Company A will produce units and sell at . Similarly, Company B will produce units and sell at . At the optimum output levels, Company A earns total profits of and Company B earns total profits of . Therefore, the total industry profits are . At the optimum output levels, the marginal cost of Company A is and the marginal cost of Company B is . The following table shows the long-run equilibrium if the firms act independently, as in the Cournot model…
There are only two driveway paving companies in a small town, Asphalt, Inc. and Blacktop Bros. The inverse demand curve for paving services is ?= 2040 ―20? where quantity is measured in pave jobs per month and price is measured in dollars per job. Assume Asphalt, Inc. has a marginal cost of $100 per driveway and Blacktop Bros. has a marginal cost of $150. Answer the following questions: Determine each firm’s reaction curve and graph it. How many paving jobs will each firm produce in Cournot equilibrium? What will the market price of a pave job be? How much profit does each firm earn?