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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