Question
COURNOT QUANTITY SETTING PLEASE SHOW ALL YOUR WORK IN IN HOW YOU GOT YOUR ANSWER!! STEP BY STEP !! Question #1: Consider a Cournot duopoly,
COURNOT QUANTITY SETTING
PLEASE SHOW ALL YOUR WORK IN IN HOW YOU GOT YOUR ANSWER!! STEP BY STEP !!
Question #1: Consider a Cournot duopoly, the firms face an (inverse) demand function: Pb = 111 - 3 Qb.
The marginal cost for firm 1 is given by mc1 = 6 Q.
The marginal cost for firm 2 is given by mc2 = 6 Q.
What quantity will of output will the duopoly produce ?
(Assume Firm 1 has a fixed cost of $64 and Firm 2 has a fixed cost of $103)
Answer:14.80
Question #2: Consider a Cournot duopoly, the firms face an (inverse) demand function: Pb = 111 - 3 Qb.
The marginal cost for firm 1 is given by mc1 = 6 Q.
The marginal cost for firm 2 is given by mc2 = 6 Q.
(Assume Firm 1 has a fixed cost of $64 and Firm 2 has a fixed cost of $103)
What price will prevail in the duopoly equilibrium ?
Answer: 66.60
Question #3: Consider a Cournot duopoly, the firms face an (inverse) demand function: Pb = 111 - 3 Qb.
The marginal cost for firm 1 is given by mc1 = 6 Q.
The marginal cost for firm 2 is given by mc2 = 6 Q.
(Assume Firm 1 has a fixed cost of $64 and Firm 2 has a fixed cost of $103)
What quantity will firm 1 produce in the duopoly equilibrium ?
Answer: 7.40
Question #4: Consider a Cournot duopoly, the firms face an (inverse) demand function: Pb = 111 - 3 Qb.
The marginal cost for firm 1 is given by mc1 = 6 Q.
The marginal cost for firm 2 is given by mc2 = 6 Q.
(Assume Firm 1 has a fixed cost of $64 and Firm 2 has a fixed cost of $103)
What quantity will firm 2 produce in the duopoly equilibrium ?
Answer: 7.40
Question #5: Consider a Cournot duopoly, the firms face an (inverse) demand function: Pb = 111 - 3 Qb.
The marginal cost for firm 1 is given by mc1 = 6 Q.
The marginal cost for firm 2 is given by mc2 = 6 Q.
(Assume Firm 1 has a fixed cost of $64 and Firm 2 has a fixed cost of $103)
How much profit will firm 2 earn in the duopoly equilibrium ?
Answer 225.56
Question #6: Consider a Cournot duopoly, the firms face an (inverse) demand function: Pb = 111 - 3 Qb.
The marginal cost for firm 1 is given by mc1 = 6 Q.
The marginal cost for firm 2 is given by mc2 = 6 Q.
(Assume Firm 1 has a fixed cost of $64 and Firm 2 has a fixed cost of $103)
What is level of total surplus in the duopoly equilibrium ?
Answer: 985.68
Question #7: Consider a Cournot duopoly, the firms face an (inverse) demand function: Pb = 111 - 3 Qb.
The marginal cost for firm 1 is given by mc1 = 6 Q.
The marginal cost for firm 2 is given by mc2 = 6 Q.
(Assume Firm 1 has a fixed cost of $64 and Firm 2 has a fixed cost of $103)
How much DWL does the duopoly cause ?
Answer: 41.07
Question #8: Consider a Leader-Follower duopoly, the firms face an (inverse) demand function: Pb = 111 - 3 Qb.
The marginal cost for firm 1 (The Leader) is given by mc1 = 6 Q.
The marginal cost for firm 2 (The Follower) is given by mc2 = 6 Q.
(Assume Firm 1 has a fixed cost of $64 and Firm 2 has a fixed cost of $103)
What is the total industry output ?
Answer: 15.20
Question #9: Consider a Leader-Follower duopoly, the firms face an (inverse) demand function: Pb = 111 - 3 Qb.
The marginal cost for firm 1 (The Leader) is given by mc1 = 6 Q.
The marginal cost for firm 2 (The Follower) is given by mc2 = 6 Q.
(Assume Firm 1 has a fixed cost of $64 and Firm 2 has a fixed cost of $103)
What price will prevail in the market ?
Answer: 65.40
Question #10: Consider a Leader-Follower duopoly, the firms face an (inverse) demand function: Pb = 111 - 3 Qb.
The marginal cost for firm 1 (The Leader) is given by mc1 = 6 Q.
The marginal cost for firm 2 (The Follower) is given by mc2 = 6 Q.
(Assume Firm 1 has a fixed cost of $64 and Firm 2 has a fixed cost of $103)
How much of the total industry output is produced by firm 1 ?
Answer: 7.93
Question #11: Consider a Leader-Follower duopoly, the firms face an (inverse) demand function: Pb = 111 - 3 Qb.
The marginal cost for firm 1 (The Leader) is given by mc1 = 6 Q.
The marginal cost for firm 2 (The Follower) is given by mc2 = 6 Q.
(Assume Firm 1 has a fixed cost of $64 and Firm 2 has a fixed cost of $103)
What are the profits of firm 2 ?
Answer: 213.90
Question #12: Consider a Leader-Follower duopoly, the firms face an (inverse) demand function: Pb = 111 - 3 Qb.
The marginal cost for firm 1 (The Leader) is given by mc1 = 6 Q.
The marginal cost for firm 2 (The Follower) is given by mc2 = 6 Q.
(Assume Firm 1 has a fixed cost of $64 and Firm 2 has a fixed cost of $103)
How much consumer surplus is created by industry transactions ?
Answer: 346.56
Question #13: Consider a Leader-Follower duopoly, the firms face an (inverse) demand function: Pb = 111 - 3 Qb.
The marginal cost for firm 1 (The Leader) is given by mc1 = 6 Q.
The marginal cost for firm 2 (The Follower) is given by mc2 = 6 Q.
(Assume Firm 1 has a fixed cost of $64 and Firm 2 has a fixed cost of $103)
How much DWL is created by the Leader-Follower industry structure ?
Answer: 33.32
Question #14: Consider a Leader-Follower duopoly, the firms face an (inverse) demand function: Pb = 111 - 3 Qb.
The marginal cost for firm 1 (The Leader) is given by mc1 = 6 Q.
The marginal cost for firm 2 (The Follower) is given by mc2 = 6 Q.
(Assume Firm 1 has a fixed cost of $64 and Firm 2 has a fixed cost of $103)
How much total surplus is created by the Leader-Follower industry structure ?
Answer: 993.43
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Macroeconomics Principles Applications And Tools
Authors: Arthur O Sullivan, Steven M. Sheffrin, Stephen J. Perez
7th Edition
978-0134089034, 9780134062754, 134089030, 134062752, 978-0132555234
