SOLVE THE BELOW PROBLEMS

1. Two firms compete in a market to sell a homogenous product which inverse demand function a P = 600 - 3Q. Each firm produces at a constant marginal cost of $300 and has no fixed costs. Use this information to compare the output levels and profits in settings characterized by Cournot, Stackelberg. Bertrand, and collusive behavior. Use the provided LX Solvers to solve.

Hint: Use for Collusion, Cournot, and Stackelberg Excel Spread Sheet Solvers. You may use the Book Example for Bertrand or the information I have provided.

For Bertrand - MC=P and Profits are Zero

You may use screen shots or save as images, PDF the Excel Solver results for Collusion, Cournot and Stackelberg.

Collusion solver -

MARKET STRUCTURE: COLLUSIVE DUOPOLY WITH LINEAR DEMAND AND CONSTANT MARGINAL 1) In the green cell, type marginal cost from the cost function C(Q) = c@ and then PRESS ENTER Monopolist's marginal cost (C) $2.00 2) In the green cells, type the intercept and slope of the inverse market demand function P = a - bQ and then PRESS E Intercept (a) 10 Slope (b) COLLUSIVE OUTCOME: Firm 1 Firm 2 Industry Profit $4.00 $4.00 58.00 Quantity 1.0 1.0 2.0 Price 56.00MARKET STRUCTURE: COURNOT DUOPOLY WITH LINEAR DEMAND AND CONSTANT M. 1) In the green cells, type each firm's marginal cost for the cost function C(Q) = c0, and then PRESS ENTER Firm l's marginal cost (c) $2.00 Firm 2's marginal cost (c) $2.00 2) In the green cells, type the intercept and slope of the inverse market demand function P = a - bQ and then P.R. Intercept (a) 10 Slope (b) COURNOT EQUILIBRIUM OUTCOME: Firm 1 Firm 2 Industry Profit $7.11 57.11 $14.22 Quantity 2.7 2.7 5.3 Price 54.67MARKET STRUCTURE: STACKELBERG DUOPOLY WITH LINEAR DEMAND AND CONSTANT MARG 1) In the green cells, type each firm's marginal cost from the cost function C(Q) = c0, and then PRESS ENTER Leader's marginal cost (c) 52.00 Follower's marginal cost (c:) 52.00 2) In the green cells, type the intercept and slope of the inverse market demand function P = a - bO and then PRESS. Intercept (a) 20 Slope (b) STACKELBERG EQUILIBRIUM OUTCOME: Leader Follower Industry Profit 520.25 $10.13 $30.38 Quantity 4.5 2.3 Price $6.50