Multiple Choice O N O If firm A predicts B will set a price of $12, then firm A should charge a price of $ O $6 $8 $10 Price for Firm B $12 6 R to maximize A's profit.
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- Gary's Gas and Frank's Fuel are the only two providers of gasoline in their town. Below is the demand schedule for the market of gasoline. Assume that the cost of producing gasoline is 3 per gallon (AC=3, FC-D0). Suppose that the two producers collude (split production and profits evenly), what are the joint profits of these two firms? Q demanded (in gallons) 10 12 4 Market price (in dollar) $22 $20 $18 $16 $14 $12 $10 $8 $6 $0 O $27 O None of these options is correct. $55 O $72 O $36 50 00 3)Economics Bidding for Bookstore Licenses. Paige initially has the only license to operate a bookstore in Bookville. She charges a price of $13 per book, has an average cost of $3 per book, and sells 1,501 books per year. When Paige's license expires, the city decides to auction two bookstore licenses to the highest bidders. Suppose the relevant variables (price, average cost, and output per firm) take on only integer valueslong dash—no fraction or decimals. a. Suppose Paige is optimistic and imagines the best possible outcome with a two-firm market. What is the maximum amount she is willing to pay for one of the two licenses? $ nothing (Hint: How will the relevant variables change? What is the smallest possible change in their values?) b. Suppose Paige is pessimistic and imagines the worst possible outcome with a two-firm market. What is the maximum amount she is willing to pay for one of the two licenses? $ nothing (Enter your response as an integer.)10Two firms produce differentiated products. The demand for each firm’s product is as follows: Demand for Firm 1: q1 = 20 – 2p1 + p2 Demand for Firm 2: q2 = 20 – 2p2 + p1 Both firms have the same cost function: c(q) = 5q. Firms compete by simultaneously and independently choosing their prices and then supplying enough to meet the demand they receive. Please compute the Nash equilibrium prices for these firms.
- It takes 3,000 households having average annual income of $50,000 within a 3-mile radius to support a grocerystore. There are actually 6,000 households within 3-miles of the Shop-Rite Grocery that have $50,000 per yearaverage incomes. Today, Shop-Rite is the only grocery store in this area. Using the concept of Nash Equilibrium inlocation, explain what the likely outcome will be for this area, given those conditionsSuppose 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=390-Q. The only cost is a constant marginal cost of $14. Suppose Firm A produces a quantity of 57 and Firm B produces a quantity of 44. If Firm A decides to increase its quantity by 1 unit while Firm B continues to produce the same 44 units, what is the Marginal Revenue for Firm A from this extra unit? Enter a number only, no $ sign. Don't forget to include the negative sign if revenue decreases. 231Consider two gas stations in a remote village facing the simple linear market demand Q= 300− 5p but have different marginal costs of production, both constant, such that MCx = 20 and MCy = 101. Measuring the quantities Qx on the horizontal axis and the quantities Qy on the vertical axis, draw the reaction curves for each of the gas stations.2. Based on a Cournot equilibrium, find the profit-maximizing quantities Qxand Qy for the two gas stations.3. Based on your answers to (1) and (2) above, if gas station y decided to produce 175 units, (a) what would be the reaction of gas station x, and (b) how would y, in turn, react to that level of output of x?
- Two farmers produce milk for local town with local milk demand given by Q=100-1/3P (P denotes price measured in Rands, Q denotes the quantity measured in litres). Both farmers have the same cost function given by TC=150+2q (where q denotes output) a. Determine the reaction function of each farmer. b. Find the cournot-Nash equilibrium. c. Calculate profit for each farmer d. Suppose that both farmers decide to form a cartel, determine profits for each farmer under the cartel. e. What output should farmer 1 produce if he/she expects their rival to produce 20 units?h. What if farmer 1 is a leader and farmer 2 a follower, determine the price, quantity and profits made by these two farmers - please answers questions e, f and hA6 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?The table shows the demand curve for monster trucks. There are two monster truck producers. For simplicity, assume that the cost of producing a monster truck is zero. (AC=0, FC=0) Q demanded Price 1 $18 2 $16 3 $14 4 $12 5 $10 6 $9 7 $7 8 $6 9 $5 Assume the two producers initially collude to maximize profits, splitting production and profits evenly. What price will they charge? $___________ What is the total quantity produced? __________monster trucks What are the profits for each firm? $___________
- 1. The market (inverse) demand function for a homogeneous good is P(Q) = 10 - Q. There are two firms: firm 1 has a constant marginal cost of 2 for producing each unit of the good, and firm 2 has a constant marginal cost of 1. The two firms compete by setting their quantities of production, and the price of the good is determined by the market demand function given the total quantity. a. Calculate the Nash equilibrium in this game and the corresponding market price when firms simultaneously choose quantities. b. Now suppose firml moves earlier than firm 2 and firm 2 observes firm 1 quantity choice before choosing its quantity find optimal choices of firm 1 and firm 2.Suppose we have two identical firms 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=477-Q. The only cost is a constant marginal cost of $16. Suppose Firm A produces a quantity of 66 and Firm B produces a quantity of 49. If Firm A decides to increase its quantity by 1 unit while Firm B continues to produce the same 49 units, what is the Marginal Revenue for Firm A from this extra unit? Enter a number only, no $ sign. Don't forget to include the negative sign if revenue decreases.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?