Suppose the demand for a product is P = 150 - Q and that the marginal cost of producing the product is $30. If two firms were initially competing in a Cournot oligopoly and then decide to collude to maximize joint profits, what is the profit that each firm would get if they could collude?
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- 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…Once more, please consider a market with eight producers that produce a total of 30,000 units. Their output is broken down below: Firm's Firm Output One 7400 Two 1800 Three 4100 Four 5200 Five 1400 Six 2800 Seven 6600 Eight 700 According to our lecture, this industry likely to be an oligopoly because is not; a small number of firms produce a large amount of the output O is; a small number of firms produce a large amount of the output O is not; production is spread out among relatively many firms is; production is spread out among relatively many firmsDo 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.
- Consider a oligopoly with two firms. Each firm has constant marginal cost of 3 dollar per unit and zero fixed costs. Suppose the market demand curve is P = 15-Q, where Q=Q1+Q2 is the sum of the quantities produced by both firms. Suppose each firm can produce either 1, 2, 3, or 4 units. Which of the following is an optimal collusive outcome for the firms? O Each firm produces 2 units. Each firm produces 4 units. O Each firm produces 3 units. O Each firm produces 1 unit.Consider a "punishment" variation of the two-firm oligopoly situation shown in the figure below. Suppose that if one firm sets a low price while the other sets a high price, then the firm setting the high price can fine the firm setting the low price. Suppose that whenever a fine is imposed, X dollars are taken from the low-price firm and given to the high-price firm. RareAir's price strategy High Low $12 $15 A B High $12 $6 $6 $8 Low $15 $8 Instructions: Enter your answer as a whole number. What is the smallest amount that the fine X can be such that both firms will want to always set the high price? $O million Uptown's price strategySuppose that there are two firms producing a homogenous product and competing in Cournot fashion and let the market demand be given by Q = 360-- Assume for simplicity that each firm operates with zero total cost. Suppose that two firms collude. How much more profit each firm can obtain relative to Cournot competition? 8000 14400 7200 16000
- Discuss what can be the expected resultof the firms in the Cournot oligopoly, that is, that can be the expected Nash Equilibrium solution fora household cleaning appliance firm.GoJex and Grav are both considering whether to charge a low price or a high price to their customers. If both firms charge a low price, each firm will make a profit of $5 million. If GoJex charges a low price while Grav charges a high price, GoJex will make a profit of $25 million and Grav will only make a profit of $2 million. On the other hand, if GoJex do not charges a low price while Grav does, GoJex will make a profit of $2 million while Grav will make a profit of $25 million. Finally, if both firms charge a high price, each firm will make a profit of $15 million. a. Use the information above to construct a payoff matrix for GoJex and Grav and What is the dominant strategy for each firm? Explain. b. Based on your answer (point b) above, what is the Nash equilibrium for this game? Explain. c. What is the cooperative (collusion) outcome? Explainif 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?
- The inverse demand function in a market is given by P = 500- Q. The fırms that operate in this market have zero fixed costs, and constant marginal costs equal to MC = 2O. %3DIf firm 1 and firm 2 are the oligopolistic firms in bottled spring water production in Nomansland. The market demand is given by ? = 5000 −20?, Qd is the number of kilolitres demanded per month while P is the price of kilolitres of bottled water. The marginal cost of a kilolitre of bottled water is R10.How do I Find the Cournot equilibrium quantities and price? and how do I Find the Cournot profits and the monopolist profits?In a market there are five firms, all have a total cost curve equal to CT = 2q. The market demand is Q = 500 - 5P. How much profit would each firm get if they collude and share the market equitably? What is the profit to each firm if they agree to collude, but one firm misleads the others charging a slightly lower price? What is the profit if all firms do not collude and compete via price?