Suppose two firms are the sole producers of widget in West Africa, and they are faced with a market demand function given as P = 40 - 20Q While Dally Limited is located in Nigeria, Joy Manufacturing operates from Ghana. The firms' total cost function is given as TC = 12 + Q a.) Determine the output and profit for each firm under Cournot's assumptions. b.) To aid Joy Manufacturing increase its output to the Stackelberg leader's output level, the Ghanaian government plans to support the firm with subsidies. In monetary terms what should be the value of the subsidy that will make Joy Manufacturing the leading firm in the market? c.) Assume the fims now operates under Stackelberg' s assumptions, with Joy Manufacturing as the leader, determine output and profit for each firm
Suppose two firms are the sole producers of widget in West Africa, and they are faced with a
a.) Determine the output and profit for each firm under Cournot's assumptions. b.) To aid Joy Manufacturing increase its output to the Stackelberg leader's output level, the Ghanaian government plans to support the firm with subsidies. In monetary terms what should be the value of the subsidy that will make Joy Manufacturing the leading firm in the market?
c.) Assume the fims now operates under Stackelberg' s assumptions, with Joy Manufacturing as the leader, determine output and profit for each firm.
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