Two firms engage in Cournot competition in the Everlasting Gobstopper industry. The price elasticity of demand is -2. Firm 1 has a constant marginal cost of $205.00 per unit, and firm 2 has a constant marginal cost of $297.25 per unit. If the two firms are currently in equilibrium, what is firm 2's share of the market? Enter your answer as a decimal, rounded to two places if necessary. 0.59
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- Two firms engage in Cournot competition in the Everlasting Gobstopper industry. The price elasticity of demand is-2. Firm 1 has aconstant marginal cost of $110.00 per unit, and firm 2 has a constant marginal cost of $181.50 per unit. If the two firms are currently inequilibrium, what is firm 2's share of the market? Enter your answer as a decimal, rounded to two places if necessary.______ Please show all stepsTwo firms engage in Cournot competition in the Everlasting Gobstopper industry. The price elasticity of demand is -2. Firm 1 has a constant marginal cost of $365.00 per unit, and firm 2 has a constant marginal cost of $602.25 per unit. If the two firms are currently in equilibrium, what is firm 2's share of the market? Enter your answer as a decimal, rounded to two places if necessary.Two firms compete as Stackelberg duopolists in a market with inverse demand given by 132.00 – 20, where pis the per-unit price, q; is the output for Firm i(either Firm 1 or 2), and Q = q1 + q2. Firm 1 is the leader in this market. Both firms face constant marginal costs of $4 per unit. Assume no fixed costs. What is the optimal output for Firm 1? (Round to two decimals if necessary.) What is the optimal output for Firm 2? (Round to two decimals if necessary.)
- Two firms operate in a Cournot Duopoly with an inverse market demand function: P = 180 – 3Q, where Q = q1 + q2. Firm 1 has a total cost structure; TC1 = 50 + 2q1 + 2q1 2 and firm 2 had a total cost structure: TC2 = 100 + 3q2 + 3q2 2 . Answer the following questions: a. If both firms wish to compete, what is the optimal quantity for each firm (qi) and the market price? b. What are the profits for each firm from the strategy in part a? c. If both firms choose to collude and not directly compete, what is the new price, quantity, and profits for each firm?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?Assume Happyland's marginal cost is represented by MC₁. Happyland will set a price of per ticket. According to the kinked demand curve model, if one firm its price, other firms will do likewise to retain their market share, but if one firm its price, other firms will not follow suit. Therefore, if one of Happyland's competitors decreases its price to below the price you just found for Happyland, Happyland will The basic principle behind the kinked demand curve model explains why the D₁ portion of the kinked demand curve is relatively D₂ portion. If Happyland's marginal cost decreased from MC₁ to MC₂ on the graph, Happyland would elastic than the
- Suppose 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?The firms in a duopoly produce differentiated products. The inverse demand for Firm 1 is The inverse demand for Firm 2 is and P₁ = 52-9₁-0.592. Each firm has a marginal cost of m= $1 per unit. Solve for the Nash-Cournot equilibrium quantities. The Cournot equilibrium quantities are (Enter your responses rounded to two decimal places.) P₂ = 100-92-0.5q1₁. 91 = units 92 units. =A homogenous-good duopoly faces a market demand function of P= 14 - Q, where Q = Q1 + Q2. Both firms have the same structure of total cost functions as follows: TC =2 + 2Q1, where Q, is Firm 1's output level. TC2 = 2 + 2Q2, where Q2 is Firm 2's output level. Suppose that Firm 1 sets its output level first and then Firm 2, after observing Firm 1's output level, makes its output decision. What is the market price (P*) at a Stackelberg equilibrium? P* = $10. %3D P* = $8. O P* = $6. P* $5. None of the above.
- A duopoly faces a market demand of p= 120 - Q. Firm 1 has a constant marginal cost of MC' =S10. Firm 2's constant marginal cost is MC = S20. Calculate the output of each firm, market output, and price if there is (a) a collusive equilibrium or (b) a Cournot equilibrium. The collusive equilibrium occurs where q, equals and q, equals (Enter numeric responses using real numbers rounded to two decimal places) Market output is The collusive equilibrium price is S The Cournot-Nash equilibrium occurs where q, equals and q2 equals Market output is Furthermore, the Cournot equilibrium price is SDuopoly quantity-setting firms face the market demand p=270 -a. Each firm has a marginal cost of $30 per unit. What is the Cournot equilibrium? The Cournot equilibrium quantities for Firm 1 (q,) and Firm 2 (92) are units and 92 = units. (Enter numeric responses using real numbers rounded to two decimal places.)The market demand curve faced by Stackelerg duopolies is: Qd = 12,000 - 5P where Qd is the market quantity demanded and P is the commodity's price in dollars. Firm A's marginal cost is: MCa = 0.08qa where MCa is Firm A's marginal cost in dollars and qa is the quantity of output produced by Firm A. Firm B's marginal cost equation is: MCb = 0.1qb where MCb is Firm B's marginal cost in dollars and qb is the quantity of output produced by Firm B. Because of Firm A's lower marginal cost, Firm B has conceded the power to move first to Firm A. a. Given Firm B will move second, what is the equation for Firm B's reaction function with qb expressed as a function of qa? b. Given Firm A can move first, what quantity of output will Firm A produce? c. What quantity of output will firm B produce? What price will be established for the commodity?