Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

An incumbent firm, Firm 1, faces a potential entrant, Firm 2, with a lower marginal cost. The market demand curve is p = 130 -

image text in transcribedimage text in transcribed
image text in transcribedimage text in transcribed
An incumbent firm, Firm 1, faces a potential entrant, Firm 2, with a lower marginal cost. The market demand curve is p = 130 - q1 - 92 Firm 1 has a constant marginal cost of $40 per unit, while Firm 2's is $10. What are the Cournot equilibrium price, quantities, and profits if there is no government intervention? The Cournot equilibrium quantities for Firm 1 (q, ) and Firm 2 (92) are 91 = units and 92 = units. (Enter numeric responses using real numbers rounded to two decimal places.) The Cournot equilibrium price is p = $ Profit for Firm 1 is and profit for Firm 2 is 2 = $To block entry, the incumbent appeals to the government to require that the entrant incur extra costs. What happens to the Cournot equilibrium if the legal requirement causes the marginal cost of the second firm to rise to that of the first firm, $40? The Cournot equilibrium quantities for Firm 1 (q, ) and Firm 2 (92) are 91 = units and 92 = units . The Cournot equilibrium price is p =$. Profit for Firm 1 is my = $ and profit for Firm 2 is 12 = $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Business Reporting For Decision Making

Authors: Jacqueline Birt, Keryn Chalmers, Albie Brooks, Suzanne Byrne, Judy Oliver

4th Edition

978-0730302414, 0730302415

Students also viewed these Economics questions

Question

mple 10. Determine d dx S 0 t dt.

Answered: 1 week ago