(Figure: Market Demand Curve I) The graph shows the market demand curve. Price (S) 40- 36 32 28 24 20 16 12 8 4- MR 2 3 4 56 8 9 10 Quantity The equilibrium price in a Cournot duopoly with identical goods is S a.8 b. 12 c.24 O d. 18.64 MC-AC 7
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- Refer to the table below to answer the following questions. Table 14.2.10 Fim A Comply A: Sim Cheat A $1 Sm Comply B Sim B-S05m Firm B A:-50.5m A0 Cheat B $15m B:0 Refer to Table 14.2.10. Firm A and Firm B are the only producers of soap powder. They collude and agree to share the market equally. The equilibrium a dominant strategy equilibrium because the strategy in this game is for a firm Select one O A is to comply regardless of the other firm's choice O B.is to comply when the other firm cheats and to cheat when the other firm complies O Cis not to comply when the other firm complies and to cheat when the other firm cheats OD. is to cheat regardless of the other firm's choice OEis not to comply when the other firm cheats and to cheat when the other firm complies 219 PMEconomics How would the Coumot equilibrium change in the airine example if American's marginal cost were $100 and United's were $2007 The demand the duopoly quantity-setting firms face is Q- 339 -p with an inverse demand function of p- 339-19A1qu- where qa is the quantity produced by American and qu is the quantity produced by United. The Cournot-Nash equilibrium occurs where qa equals and qu equals (enter numeric responses using integers)16:04 AM • ll l 16%! eclass.uonbi.ac.ke/mod/qu 2 If a duopolist has a linear demand curve of the form Q=400 – P. Assuming each firm has total cost (TC=3000+100Q). Calculate the profit- maximizing price-quantity combinations using the following four oligopoly pricing models listed below demonstrating that: а. Under the Cournot model, both firms will earn same level of profit and determine industry profit and explain why this is would be the case. b. Under the Cartel model each firm earns a higher profit than under Cournot. Under the Quasi-competitive model, the firm will make a loss equivalent to fixed cost. С. d. Under the Stackelberg's model the leader will earn more than twice the profit of the follower and that total industry profits will be lower than under both Cournot and Cartel models. Explain why this is would be the case. I + II II !!!
- Two firms produce identical products at zero cost, and theycompete by setting prices. If each firm charges a low price,then both firms earn profits of zero. If each firm charges ahigh price, then each firm earns profits of £30. If one firmcharges a high price and the other firm charges a low price,the firm that charges the lower price earns profits of £50, andthe firm charging the higher price earns profits of zero. (a) Which oligopoly model best describes this situation?(b) Write this game in normal form.(c) Suppose the game is infinitely repeated. Can theplayers sustain the "collusive outcome" as a Nashequilibrium if the interest rate is 50 percent? Explain. Please answer the a, b and c parts.Q² 4 PROBLEM (4) Firm A and Firm B with identical total costs TCA (QA) related goods and competing in prices (Bertrand competition), with demands: QA = 510 - 2PA + pв and Qв= 510 - 2pв+ pa, respectively. = and TCB (QB) Q² 4 are producing (a) Calculate the Bertrand-Nash equilibrium prices. (b) Calculate the prices they charge when A is the leader and sets its price first, anticipating B's best response and taking it into account (like in Stackelberg competition). (c) Calculate the prices they charge when they collude, in order to maximize sum of their profits.Rainbow Wer-Odeon Bargaining Game Rainbow Reeder Rep S O St O O PH M Rainbow Writer (RW) is a small online company selling a highly rated software package for printing color labels directly onto CDs. The firm currently earns a profit of $2 million per year selling its package exclusively on its Web site. Odeon, the producer of the most popular software package for editing and burning CDs and DVDs has expressed interest in bundling Rainbow Writer's product into its own package. Odeon expects that bundling would further boost its sales and allow it to sell the new bundled product at a higher price, thus raising its profits beyond its current profit of $12 million. Figure 5 shows the decision tree for the Rainbow Writer-Odeon bargaining game. Refer to Figure 5. How will Rainbow Writer respond to Odeon's two possible offers? O Rainbow Writer will only accept an offer of $40 per copy of the software package. O Rainbow Writer will only accept an offer of $30 per copy of the software package.…
- 4:21 lLTE Work 13. In the Nash equilibrium of a prisoner's dilemma: 14. Suppose Acme and Mega produce and sell identical products and face zero marginal and average cost. Below is the market demand curve for their product 4 3 2 D 0 0 50 200 100 150 Quantity Suppose Acme and Mega decide to collude and work together as a monopolist with each firm producing half the quantity demanded by the market at the monopoly price. If Mega cheats on the agreement by red ucing its price to $1 and Acme matches the price cut, then if consumers are evenly split between the two firms, Acme's economic profit will be Price ($/unit)2. The market for dark chocolate us characterized by Cournot duopolists - Honeydukes and Wonka industries. The market demand for dark chocolate is:P = 8 - 0.005Qdwhere P is the price per bar in dollars and Qd is dark chocolate's daily quantity demanded in bars (use qh to represent the quantity of dark chocolate sold by Honeydukes and qw to represent the quantity of dark chocolate sold by Wonka Industries). Honeydukes has a constant marginal cost of $2.50 per bar, while Wonka Industries has a constant marginal cost of $3.00 per bar. The firms move simultaneously in choosing their profit-maximizing quantity of output.a. Given the firms move simultaneously, what is the equation for Honeydukes' reaction function with qh expressed as a function of qw?b. Given the firms move simultaneously, what is the equation for Wonka's reaction function with qw expressed as a function of qh?c. What quantity of dark chocolate will each firm produce in equilibrium and what price will be established for a…Rawlding is a manufacturer in the oligopolistically competitive market for footballs. Two other manufacturers, Spaldon and Wilke, compete with Rawlding for football consumers. Rawlding faces the demand curve for footballs depicted on the graph. Initially, Rawlding charges $30 per football, producing and selling 7 million footballs per year. PRICE (Dollars per ball) 36 35 34 33 32 31 30 29 28 27 26 O 7 8 FOOTBALLS (Millions of balls) 9 10 G As an oligopolist, Rawlding is a price maker. If Rawlding raises the price of its football from $30 to $32 per ball, the quantity of Rawlding footballs demanded by million footballs per year. If Rawlding reduces the price of its football from $30 to $28 per ball, the quantity of by million footballs per year. (Hint: Click on the points on the graph to see their coordinates.) footballs demanded If Rawlding raises the price of its football above $30, the kinked demand curve model suggests that Spaldon and Wilke will respond by The portion of Rawlding's…
- 25. Figure 1.7 represents an oligopoly firm. The existing price and quantity are $10 and $2,000 units. If we assume that rival firms match price decreases but not price increases, the firm's demand curve will most likely be (from left to right)... Figure 1.7 PRICE (S) 122 DI 0 a. D₁ED₁ b. D₂ED2 c. D₁ED2 d. D₂ED1 2000 QUANTITY DI D24. Consider a market where inverse demand is given by P=630-3Q. Marginal costs are symmetric at 90. What would be the difference between and Stackelberg duopoly equilibrium and a three firm Cournot-Nash equilibrium?4. Farmer Andy and Farmer Betty are the only two farmers that grow heirloom tomatoes for sale at the local farmer's market and compete as Cournot duopolists. The inverse demand curve for heirloom tomatoes at the market is P = 140 - 5Q where P is the %3D price per pound of tomatoes and Q is the number of pounds of tomatoes in hundreds per week; Q = qA + qB. Both Andy and Betty have a cost of growing tomatoes of w = 10, r = 20, and both have K = 1 in the short run. They both have a production function of q = L0.5KO.5. They will both earn profits of --.
