Problem 6

You are given the following information: P=1600QmQm=i=1nqiC(qi)=400qi You are given the following information: P=1600QmQm=i=1nqiC(qi)=400qi *Note: there can be 1 firm, there can be 2, there can be 100 . If there are two then: Q=q1+q2 1. Find the quantity and price in a perfectly competitive setting. ( Set P(Q)=AC) a. Solve for the Perfectly competitive Price and Supply b. Calculate the producer, consumer and total surpluses. 2. Find the following if the market is controlled by a monopolist: a. Quantity supplied by the firm. b. Market Price. c. Profits earned by the firm. d. Deadweight loss under the monopoly. 3. Find the following if the market is controlled by two firms who make their production decision simultaneously (Cournot): a. Quantities supplied by each firm. b. Market Price c. Profits earned by each firm. d. Deadweight loss under the duopoly. e. BR functions, and NE. 4. Find the following if the market is controlled by two firms who make their production decision sequentially (Stackelberg): a. Quantities supplied by each firm. b. Market Price c. Profits earned by each firm. d. Deadweight loss under the duopoly. 5. Find the following if the market is controlled by two firms who work together as a cartel. a. Quantities supplied by each firm. b. Market Price c. Profits earned by each firm. d. Deadweight loss under the cartel duopoly. 6. Explain (in words and with graphs) how market efficiency is different among the different market settings above. Use surplus, Profit, and DWL as your gauges