Please do not copy from other source and I do need super explanation. Thank you.

D. Quantitative Analysis

Please read "Oligopoly Output-Setting Models", pages 511-517 and "Instructor's Notes" on Monopolistic Competition and Oligopoly. Then, complete the following problems:

Problem #1 (15 points): Assume that the market demand for a new drink is given by P = 30 - Q and the marginal cost to produce this new drink is $3.

a)Graph the demand curve, the marginal revenue curve and the marginal cost curve using Excel document.

b)Calculate the competitive market equilibrium price and quantity.

c)Calculate the monopolist market equilibrium price and quantity.

d)Calculate the Cournot market equilibrium price-output solutions.

e)Calculate the Stackelberg market equilibrium price-output solutions.

Problem # 2 (9 points): Consider two identical firms (A and B) that face the following linear market demand curve and marginal cost:

P = 1200 - Q, where Q = Q1 + Q2 and MC = 0.

a)Derive firms A and B output-reaction curves.

b)Calculate the Cournot equilibrium quantity per firm and price in this market.