Micro Economics

13. Suppose two firms Google and Bing serve the entire market for online search, and Google behaves like a Stackelberg leader. The demand for search is p = 400 - 20, where capital Q is the combined output of the two firms, and MC = AC = 50. Bing's best response function is qs = 150/4 - qG. a. Solve for Google's residual inverse demand curve (2 points) b. Don't worry about part A now. Suppose Google's residual inverse demand curve is actually p = 300 -5qc. Given this information, what is Google's residual marginal revenue curve? (1 point) c. Don't worry about part b now. Suppose Google's residual marginal revenue curve is 70 - 3qc. If MC = AC = 50, what is the optimal quantity for Google to produce? (1 point) 14. In which type of competitive environments do firms compete by choosing prices rather than by taking prices as given or competing on quantity? Circle all that apply (2 points) a. Bertrand oligopoly b. Cournot oligopoly c. Stackelberg oligopoly d. Perfect competition