With Cournot competition, oligopoly firms decide on the quantity to produce. There is an equilibrium, whereeach firm chooses its production that is a best-response to the other firms' production levels. The equilibriumquantity and price is in between the competitive and monopoly market outcomes.To answer this question, you will want to use an appropriate graph on a piece of scratch paper. Otherwise,you are just guessing.Suppose that Coke and Pepsi are the only two firms in the cola market. There is Cournot competitionbetween the two firms. The marginal cost of making a bottle of cola is constant at $2/bottle. Now supposethat the marginal cost of making a bottle of cola increases to $4/bottle. In the new Cournot equilibrium, thequantity sold will begreater for both firms.less for both firms.the same for both firms.unknown, since there is not enough information to answer.

The market structure with few firms is known as an oligopoly. In case there are only two firms in a…

Suppose that Coke and Pepsi are the only two firms in the cola market. There is Cournot competition between the two firms. The marginal cost of making a bottle of cola is constant at $2/bottle. Now suppose that the marginal cost of making a bottle of cola increases to $4/bottle. In the new Cournot equilibrium, the quantity sold will be oooo greater for both firms. less for both firms. the same for both firms. unknown, since there is not enough information to answer.

Suppose that Coke and Pepsi are the only two firms in the cola market. There is Cournot competition between the two firms. The marginal cost of making a bottle of cola is constant at $2/bottle. Now suppose that the marginal cost of making a bottle of cola increases to $4/bottle. In the new Cournot equilibrium, the quantity sold will be oooo greater for both firms. less for both firms. the same for both firms. unknown, since there is not enough information to answer.

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

Chapter13: best-practice Tactics: Game Theory

Section: Chapter Questions

Problem 1E

See similar textbooks

Similar questions

Do question number 14 from the Oligopoly and Game Theory chapter. This is the first challenge question (at least for me) and starts out "The French economist Antoine Cournot developed an interesting model of competition....." Picture below. For the graph note that both reaction functions should be on the same graph. This graph should have Firm X quantity on one axis and Firm Y quantity on the other. One curve gives you the quantity of firm X for every given quantity of firm Y and the other curve gives the quantity of firm Y for any given quantity by firm X. In other words, even though they are the same function, there should be two different lines on the graph. Your submission should include the table, the graph and the answer to the question at the end with description. Please try to think carefully about the description. It shouldn't be long but there is a key idea I want to be sure that you get. One sentence should be enough if you get the thing.
At a time when demand for ready-to-eat cereal was stagnant, a spokesperson for the cereal maker Kellogg’s was quoted as saying, “ . . . for the past several years, our individual company growth has come out of the other fellow’s hide.” Kellogg’s has been producing cereal since 1906 and continues to implement strategies that make it a leader in the cereal industry. Suppose that when Kellogg’s and its largest rival advertise, each company earns $0 billion in profits. When neither company advertises, each company earns profits of $8 billion.If one company advertises and the other does not, the company that advertises earns $43 billion and the company that does not advertise loses $4 billion. For what range of interest rates could these firms use trigger strategies to support the collusive level of advertising?Instruction: Enter your response as a percentage rounded to the nearest whole number.i ≤ percent
At a time when demand for ready-to-eat cereal was stagnant, a spokesperson for the cereal maker Kellogg’s was quoted as saying, “ . . . for the past several years, our individual company growth has come out of the other fellow’s hide.” Kellogg’s has been producing cereal since 1906 and continues to implement strategies that make it a leader in the cereal industry. Suppose that when Kellogg’s and its largest rival advertise, each company earns $2 billion in profits. When neither company advertises, each company earns profits of $16 billion.If one company advertises and the other does not, the company that advertises earns $56 billion and the company that does not advertise loses $4 billion. For what range of interest rates could these firms use trigger strategies to support the collusive level of advertising?Instruction: Enter your response as a percentage rounded to the nearest whole number.
. OPEC, the Organization of Petroleum Exporting Countries, was founded in 1969. Their original objective was to form a cartel to increase the price that they receive for their oil exports. Create a prisoner’s dilemma type game for two large members of OPEC (e.g. Saudi Arabia and Indonesia). Create numbers, where payoffs are total annual oil export revenues for each of these two countries. Verbally explain how you got your numbers. Find the Nash equilibrium. Based on this model, what strategy is in the oil exporters’ best interest (Nash or otherwise)? How do they make it happen? Create another prisoner’s dilemmamodel for all of OPEC on one side, and all non OPEC oil exporting nations on the other side. Create numbers, where payoffs are total annual oil export revenues for each of the two sides. Verbally explain how you created your numbers. Also create your numbers applying the fact that OPEC’s total production capacity is greater than total non OPEC exports…
How would you present the market equilibrium point within an oligopolistic market via a diagram? Please clearly label where the market equlibrium is found. How would a decrease in demand change this market Equlibirum point in an oligopolistic market and how would you show this graphically?
1. Best responses in a Cournot Oligopoly Firm A and Firm B sell identical goods Total market demand for the good is: The inverse demand function is therefore 1 P(QM) = 780 -Q=780 -0.02222QM 45 QM is total market production (i.e., combined production of firm's A and B. That is: Q(P) = 35, 100- 45P 2M = A +QB As a result, the inverse demand curve for each firm is: P(QA, QB) = 780- -1/32₁-752 45 Unlike the example in class, the two firms have different costs. = 4000A TCA (QA) TCB (QB) = 260QB = 780 -0.022220A -0.02222QB a. Using the demand function and the cost functions above, what is firm A's profit function. b. Using the profit function above and assuming that firm B produces Qg, calculate what firm A's best response is to firm B’s decision to produce QB- Note: Firm A's best response should be a function of B
if two firms (firm A and firm B) are competing selling T-shirts, both at $12 per shirt, both have a quantity of 50 and both can produce a t-shirt at a cost of $2 per shirt both marginal and average. If both companies are competing directly against each other in prices, what will the new marginal price of company B will be? and what will be their profits? Also, how do you solve the equilibrium price in oligopolies?
You decide upon Australia as a location for an Asian fast-food theme restaurant because you have expertise in that sector and you believe that it will be popular. You have also considered the four market structures: perfect, monopolistic, oligopoly and monopoly competition. You decide on one of the structures. Describe each of the four market structures and explain how each one may be conducive to starting your new Asian themed small business. Suppose you start your business within a monopolistic market structure. How is that structure advantageous to your proposed business and how would it affect the future growth of your business?
At a time when demand for ready-to-eat cereal was stagnant, a spokesperson for the cereal maker Kellogg's was quoted as saying, “. for the past several years, our individual company growth has come out of the other fellow's hide." Kellogg's has been producing cereal since 1906 and continues to implement strategies that make it a leader in the cereal industry. Suppose that when Kellogg's and its largest rival advertise, each company earns $0 billion in profits. When neither company advertises, each company earns profits of $10 billion. If one company advertises and the other does not, the company that advertises earns $52 billion and the company that does not advertise loses $2 billion. For what range of interest rates could these firms use trigger strategies to support the collusive level of advertising? Instruction: Enter your response as a percentage rounded to the nearest whole number. percent
bok rint An oligopoly producing a homogeneous product is comprised of three firms that act like a cartel. Assume that these three firms have identical cost schedules. Assume also that if any one of these firms sets a price for the product, the other two firms charge the same price. As long as they all charge the same price they will share the market equally; and the quantity demanded of each will be the same. Below is the total-cost schedule of one of these firms and the demand schedule that confronts it when the other firms charge the same price as this firm. Complete the marginal-cost and marginal- revenue schedules facing the firm. erences Mc Graw Hill Output Total cost Marginal cost Price Quantity demanded Marginal revenue 0 1 23456 7 8 $0 180 300 480 720 1,020 1,380 1,800 2,280 Short Anewor LA JUL 26 $780 720 660 600 540 480 420 360 Toolbar navigation (a) What price would be charged, what output would be produced, and what profit would be made by this firm? (b) If the firms…
What are the number of firms in a oligopoly and what is the price control of product by individual firms.
Please consider an oligopoly market. Suppose you were a producer in the market. Would you corporate with or compete against other producers? If you chose competition, how would you defeat the rivalries?