There are two ice-cream parols on a beach. The dayly demand for ice-creams is given by Q = 3252 - 7p. The average variable cost of an ice-cream is 83 while the rent of the place is 576. How many ice-creams is one company selling if the two ice-cream stands operate as Cournot duopolists? (Please use 2 decimals in your answer.)
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There are two ice-cream parols on a beach. The dayly demand for ice-creams is given by Q = 3252 - 7p.
The average variable cost of an ice-cream is 83 while the rent of the place is 576. How many ice-creams is one company selling if the two ice-cream stands operate as Cournot duopolists? (Please use 2 decimals in your answer.)
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- There are two ice-cream parols on a beach. The dayly demand for ice-creams is given by Q = 3079 - 3p. The average variable cost of an ice-cream is 70, while the rent of the place is 966. How many ice-creams is the 'Leader' company selling if the two ice-cream stands operate as Stackelberg duopolists? (Please use 2 decimals in your answer.)SUB-SECTION B2 13 Electra and Luminux are the only two firms who provide electricity in a local market as a Cournot duopoly. The electricity provided by the two firms is identical and consumers are indifferent about which firm they will purchase electricity from. The market inverse demand for electricity is P = 100 - 2Q, where is the aggregate quantity of electricity produced by the two firms, qe qL. Electra has a marginal cost of 12, while Luminux has a marginal cost of 20. Assume that neither firm has any fixed costs. (a) Determine each firm's reaction curve and graph it. How much electricity will each firm produce in a Cournot equilib- rium? (c) What will the market price for electricity be? How much profit does each firm make? (e) Suppose now that the two firms move sequentially with one of them acting as a Stackelberg leader. Do you expect the outcome to the closer to perfect competition when Electra, or when Luminux, moves first? Explain your answer.The diagram above shows a monopolistically competitive firm in the long run. Answer the questions below. If the firm is currently producing and selling Q1 units, what is the price being charged? Using the points displayed on the diagram, name the rectangular area that represents the total fixed cost of production. Using the points displayed on the diagram, name the rectangular area that represents the total variable cost of production. ) Using the points displayed on the diagram, name the rectangular area that represents the profit or loss. What should the firm do regarding price and/or quantity to minimize its losses?
- Assume there is just one kebab stall selling kebab to students at the University of London, which we will call Ammar's. Because there is no direct competition at the stall, the seller can sell his kebab for $4 and earn $800 per day. However, Anwar, a Kebab vendor, is considering establishing up shop just down the road from Ammar's in the University of London market. When confronted by Anwar, Ammar has two options: sell at the same high price ($4) or charge a low price below the cost in the hopes of discouraging Anwar from setting up his stall. The game and payoffs for the standard game between Ammar and Anwar are listed below in the image attached. a. Find the Nash equilibrium or equilibria (if any). Justify your answer clearly.b. Is there any dominant strategy for each of the Kebab sellers? Clearlyexplain the way you find the answer.c. Do you think Ammar can threaten Anwar so that Anwar will not enter the Kebab market at the University of London? Justify your answer clearly. d. Draw…Assume there is just one kebab stall selling kebab to students at the University of London, which we will call Ammar's. Because there is no direct competition at the stall, the seller can sell his kebab for $4 and earn $800 per day. However, Anwar, a Kebab vendor, is considering establishing up shop just down the road from Ammar's in the University of London market. When confronted by Anwar, Ammar has two options: sell at the same high price ($4) or charge a low price below the cost in the hopes of discouraging Anwar from setting up his stall. The game and payoffs for the standard game between Ammar and Anwar are listed below in the image attached. a. Draw the extensive form of this game using a game tree. Find the sub perfect Nash equilibrium (SPNE) from this game tree. Justify your answer clearly.Assume there is just one kebab stall selling kebab to students at the University of London, which we will call Ammar's. Because there is no direct competition at the stall, the seller can sell his kebab for $4 and earn $800 per day. However, Anwar, a Kebab vendor, is considering establishing up shop just down the road from Ammar's in the University of London market. When confronted by Anwar, Ammar has two options: sell at the same high price ($4) or charge a low price below the cost in the hopes of discouraging Anwar from setting up his stall. The game and payoffs for the standard game between Ammar and Anwar are listed below in the image attached. a. Find the Nash equilibrium or equilibria (if any). Justify your answer clearly.b. Is there any dominant strategy for each of the shawarma sellers? Clearlyexplain the way you find the answer.c. Do you think Bilal can threaten Ali so that Ali will not enter the shawarmamarket in IIUM? Justify your answer clearly. d. Draw the extensive form…
- Suppose that a firm produces wool jackets in a monopolistically competitive market. The following graph shows its demand (DD) curve, marginal revenue (MRMR) curve, marginal cost (MCMC) curve, and long-run average total cost (LRATCLRATC) curve. Assume that all firms in the industry face the same cost structure. Place the tan point (dash symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next, place the purple point (diamond symbol) to indicate the point at which this firm would produce in the long run if it operated in a perfectly competitive market.If you have a graph showing a monopolistic competitive situation in which demand shifts to the left in the long run but your graph only shows the MR curve in the short run, how do you figure out where the long-run MR line should go on the graph? (I have 2 demand curves (sr and lr), but only 1 MR curve (sr). I think it would be to the left of MR sr, but don't know how to draw it. One would need to know this to figure out excess capacity and markup, right?Suppose that a company operates in the monopolistically competitive market for denim jackets. The following graph shows the demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve for the firm. Place a black point (plus symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next, place a grey point (star symbol) to indicate the minimum average total cost the firm faces and the quantity associated with that cost. ? 100 PRICE (Dollars per jacket) 8 20 60 50 X ATC 20 MC MR 2 2 2 2 10 0 0 30 40 50 60 70 QUANTITY (Thousands of jackets) 10 20 80 Demand 90 100 Mon Comp Outcome Min Unit Cost
- Suppose that a company operates in the monopolistically competitive market for denim jackets. The following graph shows the demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve for the firm. Place a black point (plus symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next, place a grey point (star symbol) to indicate the minimum average total cost the firm faces and the quantity associated with that cost. ? PRICE (Dollars per jacket) 100 90 80 70 60 40 30 20 MC 10 ATC MR Demand 0 0 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of jackets) + Mon Comp Outcome Min Unit Cost Because this market is monopolistically competitive, you can tell that it is in long-run equilibrium by the fact that. firm. Further, a monopolistically competitive firm's average total cost in long-run equilibrium is at the optimal quantity for each the minimum average total cost.The following graph represents a monopolistically competitive firm in long-run equilibrium. Place the black point (cross sign) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive company. Next, place the grey star on the graph to indicate the point where the LRAC reaches a minimum. PRICE PER UNIT (Dollars) 500 450 400 350 300 250 200 150 100 50 MC 0 0 50 LRAC MR Demand 100 150 200 250 300 350 400 450 500 QUANTITY (Units) Monopolistically Competitive Outcome Minimum of the LRAC The long-run equilibrium price is $ (Hint: Use the graph to find the numeric value of the price at equilibrium.) The long-run equilibrium quantity is units. The LRAC curve is at its minimum at a quantity of The long-run equilibrium price is units. the marginal cost of producing the equilibrium output. ?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?