Let us consider a market where 10 firms l= {1,2,..,10} compete à la Cournot (quantity- setting competition). The inverse demand function is given by p( Q) =1200-18Q , where Q= Eiqi. The cost function is homogeneous and it is C( q) =10q. 1.the profit functions of eachiEl is: 2.Derive the best reply functions for each firm 3.Derive the market price in the Nash equilibrium of the game.
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- Consider a market with demand P(Q) = 112 - 3Q in which 9 identical firms compete. All firms face T C(Q) = 52Q. Let X = Q2 + Q3 + . .. + Q9. (a) Write out the residual demand curve for firm 1 in terms of X and Q1. (b) Find the corresponding marginal revenue. (c) What is the reaction function for firm 1 (in terms of X). (d) Find the Cournot equilibrium (market quantity QM* , P* ). (e) Determine profits for each firm.Only typed answer Two firms both produce leather boots. The inverse demand equation is given by P = 340 - 2Q, where P is the price of boots in USD/pair and Q is quantity of boots in million pair. The cost function is given by: C(Q) = 40Q. If the two firms are Stackelberg oligopolists), the output of the leader is equal to: 1) 60 2) 80 3) 75 4) 900wo firms A and B produce an identical product (Note: Industry Output = Q). The firms have to decide how much output qA and qB (Note: qA = Firm A Output; qB = Firm B Output) they must produce since they are the only two firms in the industry that manufacture this product. Their marginal cost (MC) is equal to their average cost (AC) and it is constant at MC = AC = X, for both firms. Market demand is given as Q = Y – 2P (where P = price and Q = quantity). Select any value for X between [21 – 69] and any value for Y between [501 – 999]. Using this information, calculate the Industry Price, Industry Output, Industry Profit, Consumer Surplus and Deadweight Loss under each of the following models: (a) Cournot Model error_outlineHomework solutions you need when you need them. Subscribe now.arrow_forward Question Two firms A and B produce an identical product (Note: Industry Output = Q). The firms have to decide how much output qA and qB (Note: qA =…
- 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?Suppose we have two identical fırms A and B, selling identical products. They are the only firms in the market and compete by choosing quantities at the same time. The Market demand curve is given by P=287-Q. The only cost is a constant marginal cost of $13. If Firm A produces a quantity of 60 and Firm B produces a quantity of 33, what is market price? Enter a number only, no $ sign. 194Consider the following market demand function: Q= 20-2P, where P is the market price. Suppose there are two firms- A,B in the market and they have the same cost function: the per unit cost of producing output is 4. The firms compete by choosing quantities. Find the reaction functions for both the firms if they are maximizing profits. What is the profit maximizing output for each firm and corresponding market price? If there was only one firm in the market how would your answer change?
- A6 In Changlun, Kedah, there are two bakers, Abu and Bakar. Their bread taste the same and nobody can tell the difference. Abu has constant marginal costs of RM1 per loaf of bread. Bakar has constant marginal costs of RM2 per loaf. Fixed costs are zero for both of them. The inverse demand function for bread in Changlun is p(q) = 6 – 0.01(qA + qB), where q is the total number of loaves sold per day. Find the reaction function for Abu and Bakar. What is the Cournot Nash equilibrium number of loaves of bread for each baker?TB MC Qu. 09 - 92 Consider two firms competing... Consider two firms competing to sell a homogeneous product by setting price. The inverse demand curve is given by P = 6 - Q. If each firm's cost function is Ci(Qi 2Qi, then each firm will symmetrically produce of output and Multiple Choice 2 units; profits of $2 2 units; profits of $0 4 ) = earn units; profits of $2 4 units; profits of $0The market for fidgets has only three firms, (A, B, and C), that compete in quantities. The market shares of the firms are sA = 60%, sB = 30%, and sC = 10% respectively. The demand in the market is P = 1 − Q. The marginal cost of firm A is zero. (a) Calculate the HHI in this market (in the year of your data). (b) Suppose that firm B buys firm C. (i) What type of merger would this be? (ii) According to EU rules (on HHI level and change), would this merger be concerning? (iii) According to US rules (on HHI level and change), would this merger be concerning? (c) Call the merged firm BC. Suppose that, after the merger, A and BC compete a la Cournot again and the market shares of the firms are in equilibrium sA = 60% and sBC = 40%. What must be the marginal cost firm BC? Comment on your answer
- The market inverse demandfor salt is P(Q) = 1000−10Q. There are n firms producing salt, each with the sameconstant marginal cost c. Show that as n increases, the market gets closer to efficiency.Suppose two firms engage in simultaneous quantity competition. Both firms have 0marginal cost. Firm A : P(Q)= 24-Q Firm B: P(Q)= 24-2Q a) Find the Nash Equilibrium quantities q^NE and profits.(b) Find the Monopoly Quantity QM and Profit.(c) Now suppose the game is repeated infinitely and each firm has a common discountfactor δ. Find the required discount factor to sustain the following grim triggerstrategy as a SPNE: Play Q^M /2 if this has been played in every previous period,otherwise play q^NE.Suppose market inverse demand function is p(y)=100-Yt where Yt is total production in the market. Assume that there are two firms with following marginal cost MC(firm 1)=Y1 MC(firm 2)=2*Y2+10 Assume that Yt=Y1+Y2 Set up profit function for both firms. What is the best response function of each firm by taking into account action of other firm? What output level is going to be produced by each firm in equilibrium? Assume that Firm 1 is leader in the market and going to act first. What will be the best response and output level of firm 2. What is difference between previous and new situation? Why? What is difference between Bertrand and previous competition? How would you like to find equilibrium price?