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supply curve and market equilibrium Costs Two producers with costs: Producer 1: c1[9] = 0.5q2 + 3.59 +1 Producer 2: c2[q] = 3.59 +1, qmax

supply curve and market equilibrium

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Costs Two producers with costs: Producer 1: c1[9] = 0.5q2 + 3.59 +1 Producer 2: c2[q] = 3.59 +1, qmax 6 Demand Demand functions: D(q) = 34 9 Assume that the two producers act independently but strategically to maximize profits: They know the demand function and the cost functions of each other. They are not price takers. 1) Find the supply of each producer and the market equilibrium. 2) Calculate the consumer and producer surplus and discuss the distribution of profits among the producers? 3) How would you regulate the market to maximise welfare in this particular case and what should be the total quantity? How much could welfare be increased? Costs Two producers with costs: Producer 1: c1[9] = 0.5q2 + 3.59 +1 Producer 2: c2[q] = 3.59 +1, qmax 6 Demand Demand functions: D(q) = 34 9 Assume that the two producers act independently but strategically to maximize profits: They know the demand function and the cost functions of each other. They are not price takers. 1) Find the supply of each producer and the market equilibrium. 2) Calculate the consumer and producer surplus and discuss the distribution of profits among the producers? 3) How would you regulate the market to maximise welfare in this particular case and what should be the total quantity? How much could welfare be increased

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