Assume there are two firms, firm A and B, engaged in Cournot competition. The industry demand curve is given by P = 220 - Q, where Q = QA + QB denotes industry output. Each firm faces a marginal cost of production equal to $16. In equilibrium, what will be the output level of firm A?
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Assume there are two firms, firm A and B, engaged in Cournot competition. The industry demand curve is given by P = 220 - Q, where Q = QA + QB denotes industry output. Each firm faces a marginal cost of production equal to $16. In equilibrium, what will be the output level of firm A?
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- Consider a market of 6 firms that compete through production. Demand is given as P = 220 – 2Q. Each firm has a marginal cost of $20. a. What will be the equilibrium firm quantities, market price, and firm profits? b. Suppose two firms merge in this market to become a leader. What will be the new equilibrium firm quantities, market price, and firm profits? Was it profitable for the firms to merge into a leader? Note that n = 5 after the merger. c. Suppose another two firms merge to form a second leader in the market. What will be the new equilibrium firm quantities, market price, and firm profits? Was it profitable for the followers to merge into a co-leader? Note that n = 4 and L = 2 after the merger:There are two identical firms in an industry, 1 and 2, each with cost function , i = 1,2. The industry demand curve is P = 100 − 5X where industry output, X, is the sum of the two firms’ outputs (X1 + X2). (a) If each firm makes its output decisions on the assumption that the other will not react to its choices (the Cournot assumption), what is the equilibrium output for each firm? What is the equilibrium price? (b) Suppose that each firm takes it in turn to choose its level of output, on the assumption that the other’s output level is fixed. Would the process of adjustment be stable? (c) Suppose that firm 1 introduces a cost-saving innovation, so that its cost curve becomes C1 = 8X1. Firm 2’s cost curve and the industry demand curve are unchanged. What happens to the equilibrium quantity produced by each firm and to market price?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. 194
- Consider a set of 1000 companies operating in a competitive market. The supply curve for this market is given by O = 20+2P and the demand curve is given by D = 280-4P, where quantity Q is measured in millions of tons and Price P is measured in monetary units. Considering that the marginal cost of the individual firm is given by 2Q, the quantity Q being measured in thousands of tons, we ask: a) Sketch the market equilibrium and the equilibrium of an individual firm. b) What is the situation of this market at that particular moment. c) Make considerations about the long-run equilibrium trend of this market.Imagine a market with demand p(q) = 100 − q. There are two firms, 1 and 2, and each firm i has to simultaneously choose its price pi. If pi < pj , then firm i gets all of the market while no one demands the good of firm j. If the prices are the same then both firms split the market demand equally. Imagine that there are no costs to produce any quantity of the good. (These are two large dairy farms, and the product is manure.) Write down the normal form of this game. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.consider a market with a large number of firms, an upward sloping supply curve S0, and a downward sloping demand curve D0. We will start with the assumption that the market is perfectly competitive; hence, the supply curve S0 is the sum of the marginal cost curves of all the firms. Assume the market is perfectly competitive. Indicate the original competitive equilibrium price P0, equilibrium quantity Q0, the resulting Consumer Surplus CS0, the resulting Producer Surplus PS0, and the “socially optimal” output (the output the Benevolent Dictator would choose) QSO on your graph. Graphically indicate the size of Dead-Weight Loss DWL0 if there is such a loss. Question - Now suppose that scientists discover that this particular product has a significant Positive Externality. The Demand curve is a depiction of marginal private benefit (MPB). However, the existence of the positive externality means that for every given output level, Marginal Social Benefit (MSB) is higher than Marginal…
- Suppose Firm X is a dominant firm in a market where the market demand is Q = 1200 -2p. Once Firm X sets its price, those small competitors set their prices a little lower so that they can always sell up to their capacity. Assume the small firms’ combined capacity is 100 units. Further assume Firm X’s marginal cost is 50. Answer the following questions. Let Q^D be the quantity produced by the dominant firm. Write down the residual demand function faced by Firm X. (Hint: Think about how Q and Q^D are related.) Find Firm X’s profit-maximizing price.Suppose two profit-maximising firms, Firm 1 and Firm 2, produce an identical good. The market demand curve is P = 340 - 40 where Q = q1 + q2. The firms face costs TCi = 20gi for i = 1, 2. a) If both firms are price- setters, find the demand curve for each firm. What are the equilibrium quantity, price and profit for each firm?Suppose two food trucks face the following market demand curve and have the same marginal revenue and marginal cost curves. This means they both face the same costs, $1 per meal. Demand: P = 21 - 0.1QD Marginal Revenue (MR): P = 21 - 0.2QD Marginal Cost (MC): $1.00 Suppose that one of the food trucks decides to break the agreement and produce 60 meals per day. What will be the price charged per meal? Suppose that one of the food trucks decides to break the agreement and produce 60 meals per day. What will profit be for this food truck (the one that is now producing 60 meals)? What happened to the profits for the food truck that kept to the agreement and produced 50 meals? In retaliation for not keeping to the agreement, the other food truck has increased its production to 60 meals as well! Now, 120 total meals are being produced each day. What price will be charged per meal? With 120 total meals being produced each day, what will each firm earn in profits? After…
- Alpha and Gamma are the only two phone handset manufacturers in the world. Each firm has a cost function given by: C(q) = cq + q?, where q is number of phones produced and c=70. The market demand for phones is represented by the inverse demand equation: P = a - bQ where Q = q1 + q2 is total output, a=250 and b=1. Suppose that each firm maximizes its profits taking its rival's output as given (i.e. the firms behave as Cournot oligopolists). a) What will be the equilibrium quantity selected by each firm? What is the market price? What is the profit level for each firm? Equilibrium quantity for each firm , price , profit b) It occurs to the managers of Alpha and Gamma that they could do a lot better by colluding. If the two firms were to collude, what would be the profit-maximizing choice of output for each firm? What is the industry price? What is the profit for each firm in this case? Equilibrium quantity for each firm , price , profit c) What minimum discount factor is required for…Consider an electricity market where there are three suppliers, each with constant marginal cost (a reasonable approximation in electricity generation). Firm 1 has a capacity of 200 at MC = 5. Firm 2 has a capacity of 100 at MC = 8. Firm 3 has a capacity of 100 at MC = 10. a. If the three firms are price takers (i.e., behave competitively), what is the industry supply curve? b. Compute the equilibrium price and quantity when the market demand is Q(P) = 1000/p0.s. %3D c. Compute the equilibrium price and quantity when the market demand is Q(P) = 750/p0.5. %3D d. Compute the equilibrium price and quantity when the market demand is Q(P) = 500/P0.5.Suppose two firms compete in selling identical widgets. They choose their output levels Q1 and Q2 simultaneously and face the demand curve. P= 30 – Q, where Q = Q1 + Q2. Both firms have a marginal cost of 9. What are the market price, each firms production and profit levels?