Suppose there are two oligopoly firms; Firm 1 and Firm 2. Firm 1 is a low-cost firm where as Firm 2 is a high-cost firm. Both the firms face identical demand curve given by the demand function as; Q =50 - 0.5P The cost functions of the two firms are given, respectively as; TC1=100 + 20Q1 + 20Q1 2 P1 = 100-2Q1 and TC2 = 48 + 36Q2 + 2Q2 2. P2 =100-202 Find the following; i) Price and output of the firms separately prior to Firm 1 working as the price leader. ii) ii) Price and output of Firm 2 after it accepts the price leadership of Firm 1
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- Suppose we have a duopoly with Firm 1 and Firm 2 and the following inverse demand function:P = 100 – 5(Q1 + Q2)Total Cost and Marginal Cost values for firms 1 and 2 are:TC1 = 20Q1TC2 = 30Q2MC1 = 20MC2 = 30Assuming a Cournot Duopoly, the following response functions are derived:Firm 1: Q1 = 8 – 0.5Q2Firm 2: Q2 = 7 – 0.5Q1Using this information, calculate the quantity produced for each firm, the price, and profits foreach firm and the market as a whole.Consider a Cournot oligopoly with n = 2 firms. Firm 1 cost function is TC₁ (9₁) = 20 + 12q₁ + q², while firm 2 cost function is TC₂ (9₂) = 50 +8q2 + q2 . The total market demand is P(Q) = 50 — 2Q, where Q is the total quantity produced by all (active) firms in the industry. a- Compute the Cournot equilibrium total quantity, price, quantity for each firm, and profit for each firm. Which firm is making higher profits? b- Consider the situation in which a third firm (firm 3) enters the market. What is the total equilibrium quantity, price, quantity and profit for each firm if TC3 = TC₁? [hint: q₁ and q3 will be the same, since 1 and 3 are identical] c- How would your answer at point b change if instead TC3 = TC₂? Would consumers prefer firm 3 to enter with the total cost of firm 1 or firm 2? d- What would be the highest one-time cost that firm 3 would be willing to pay to enter the market and then compete in a Cournot game with total cost equal to firm 1?If 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?
- = Consider two firms, firm 1 and firm 2, facing the demand curve P = 24 - 2Q, where Q = Q₁ + Q₂. The firms' cost functions are C₁(Q₁) = Q² and C₂(Q₂) = 2Q². Derive the reaction functions if the firms behave non-cooperatively. a. b. C. d. e. What is each firm's Cournot-Nash-Equilibrium output and profit if they behave non-cooperatively? Draw the firms' reaction functions and show the equilibrium. Suppose that both firms have entered the industry as a cartel. What is the joint profit-maximising level of output? How much will each firm produce? How much is the profit of each firm? Compare and explain graphically each firm's Cournot-Nash-Equilibrium output with their new output where firm 2 chooses its output first. Put firm 1's output on the horizontal axis and firm 2's on the vertical axis. (Note: No calculation is required.)Two competing firms produce homogenous products. They also have the iden- tical total cost function: if a firm i produces quantity q, then its total cost is C, (4.) = 2q«- If the two firms compete in quantities (Cournot model of duopoly), then the market demand is P (g1, 2) = 60 – q1 - 2. If the two firms compete in prices (Bertrand model of duopoly) and firm i chooses price then the demand for firm i is P.. 60-P if p, is lower than the competitor's price if p, is higher than the competitor's price if p, is equal to the competitor's price Now consider two scenarios: A. The two firms are two law firms. One unit of product = one hour of labour. B. The two firms are two avocado farms. One unit of product = one ton of avocados. For each of these two scenarios, answer the following questions: (a) Should we use the Cournot model or the Bertrand model to study the firms' compe- tition? (b) Use your model of choice to predict each firm's profit level in equilibrium. (c) If the two firms…Consider a homogenous product duopoly in which the two firms, 1 and 2, compete by choosing their respective quantities, Q1 and Q2. Market demand is given by Q=20−P, where P is the market price and Q= Q1+Q2. Firm 2’s total costs are given by TC2 = 2Q2 , while firm 1’s total costs areTC1= Q1^2 . (a) calculate To which firm would the ability to move first be most valuable? Explain fully. 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.
- What is the homogeneous-good duopoly Cournot equilibrium if the market demand function is Q= 1,800 - 1,000p. and each firm's marginal cost is $0.28 per unit? The Cournot-Nash equilibrium occurs where q, equals and 92 equals (Enter numenic responses using real numbers rounded to two decimai places.) Furthermore, the equilibrium occurs at a price of $ (Round your answer to the nearest penny.)4. Consider a Cournot Oligopoly with two firms, where firm 1 is twice as efficient as firm 2. In particular, firm l's cost function is c1(q1) = q1, while firm 2's cost function is e2(q2) = 2q2. The inverse market demand function is given by P = 100 – 5(q1 +92). (a) Find the firms' reaction (best response) functions. (b) Find the firms' equilibrium output levels and their profits. Does firm 1 make twice the profit of firm 2?Reference the following information about the market demand function for questions 1 to 15. These questions are on different types of market structures – monopoly, perfect competition, Cournot oligopoly market, and the Stackelberg oligopoly market. The market demand function is given the following equation: P = 2000 – Q where Q is the industry’s output level. Suppose initially this market is served by a single firm. Let the total cost function of this firm be given the function C(Q) = 200Q. The firm’s marginal cost of production (MC) is equal to the firm’s average cost (AC): MC = AC = 200. What is the difference in the industry output levels produced by the perfectly competitive industry (Qc) and the monopoly (Qm) industry? Group of answer choices Qc - Qm = 900 units Qc - Qm = 1800 units Qc - Qm = - 900 units Qc - Qm = 600 units
- Solve for the Bertrand equilibrium for the firms described in Problem 32 if both firms have a marginal cost of $0 per unit. Problem 32 Suppose that identical duopoly firms have constant marginal costs of $10 per unit. Firm 1 faces a demand function of where is Firm 1’s output, is Firm 1’s price, and is Firm 2’s price. Similarly, the demand Firm 2 faces is Solve for the Bertrand equilibrium. CSuppose oil production in the Gulf of Mexico was a symmetric horizontal oligopoly in Cournot competition. Assume there are two producers, each with a constant marginal cost of production of $50 per barrel. Let the demand function for oil in the region be D(p) = 12000 – 20p, where demand is measured in barrels per day. (You will need to calculate inverse demand from demand before moving on). What would the perfectly competitive equilibrium price and quantity be? What would be the consumer surplus and producer surplus? Draw each firm’s residual inverse demand curve. Calculate the Cournot-Nash equilibrium price and quantity. What is the total consumer surplus, total producer surplus across the two firms, and deadweight loss?Economics Reference the following information about the market demand function for questions 1 to 15. These questions are on different types of market structures – monopoly, perfect competition, Cournot oligopoly market, and the Stackelberg oligopoly market. The market demand function is given the following equation: P = 2000 – Q where Q is the industry’s output level. Suppose initially this market is served by a single firm. Let the total cost function of this firm be given the function C(Q) = 200Q. The firm’s marginal cost of production (MC) is equal to the firm’s average cost (AC): MC = AC = 200. Now suppose the two firms engage in Stackelberg market competition. Assume firm 1 is the leader (first-mover) and firm 2 is the follower firm (second-mover). Marginal profit function of Stackelberg leader: 900−Q1 QUESTION 14: What will be the market price in this Stackelberg model? Group of answer choices $480 $650 $720 $900 QUESTION 15: Can you calculate the profit earned by the…