Question
Please answer all parts of the question. ALL ANSWERS REQUIRE AN EXPLANATION AND SHOW YOUR WORK FOR ALL CALCULATIONS. 3.1 Cournot & Stackelberg Suppose there
Please answer all parts of the question. ALL ANSWERS REQUIRE AN EXPLANATION AND SHOW YOUR WORK FOR ALL CALCULATIONS. 3.1 Cournot & Stackelberg Suppose there are two restaurants selling gyros on the same block in Davis, Sam's and Ali Baba's, and they are competing with each other following the rules of the Cournot Oligopoly Model. Suppose inverse market demand for gyros is p = 360 Q. Suppose Sam's has cost function C(qs) = qs^2 and Ali Baba's has cost function C(qab) = 11qab. A. What is the Nash-Cournot equilibrium in this market (quantities) and what is the price in the market?
B. What is consumer surplus at the equilibrium?
C. Graph the marginal cost, demand, residual demand, and marginal revenue curve for Sam's. Show the equilibrium price and quantity for that restaurant.
D.What is the Nash-Stackelberg equilibrium in this market (quantities) and what is the price in the market?
E. What is consumer surplus at the new equilibrium?
F. Graph the marginal cost, demand, residual demand, and marginal revenue curve for Sam's. Show the equilibrium price and quantity for that restaurant.
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