Question
Assume two firms 1 and 2. The inverse market demand function is given by: P=30-(q 1 +q 2 ) Each firm produces with marginal costs
Assume two firms 1 and 2. The inverse market demand function is given by:
P=30-(q1+q2)
Each firm produces with marginal costs of
MC = 6
Fixed costs are zero.
The next questions refer to the Cournot duopoly.
What is Firm 1's total revenue function?
Question 1 options:
TR1=30q1 -q1 -q22 | |
TR1=30-2q1-q2 | |
TR1=30q1 -q12-q2 | |
None of the above. |
Question 2 (1 point)
What is Firm 1's marginal revenue function?
Question 2 options:
MR1=30-2q1 -q2 | |
MR1=30-q1-2q2 | |
MR1=30-2q1-2q2 | |
None of the above. |
Question 3 (1 point)
What is Firm 1's response function?
Question 3 options:
q1=12-0.5q2 | |
q1=12-q2 | |
q1=12-2q2 | |
None of the above |
Question 4 (1 point)
If Firm 1 thinks that Firm 2 chooses to supply q2=10, then Firm 1's profit maximizing quantity would be q1*=
Question 4 options:
6 | |
7 | |
8 | |
10 |
Question 5 (1 point)
If Firm 2 thinks that Firm 1 chooses to supply q1=7, then Firm 2's profit maximizing quantity would be q2*=
Question 5 options:
6.5 | |
7.5 | |
8.5 | |
9.5 |
Question 6 (1 point)
In equilibrium, each firm will supply qi=
Question 6 options:
5 | |
6 | |
7 | |
8 |
Question 7 (1 point)
The market price in equilibrium will be P*(q1+q2)=
Question 7 options:
14 | |
16 | |
18 | |
20 |
Question 8 (1 point)
In equilibrium, each firm's total revenue is equal to TRi=
Question 8 options:
106 | |
108 | |
110 | |
112 |
Question 9 (1 point)
In equilibrium, each firm's total variable cost is TVCi=
Question 9 options:
8 | |
16 | |
32 | |
48 |
Question 10 (1 point)
In equilibrium, each firm's total profit is i=
Question 10 options:
32 | |
40 | |
48 | |
64 |
Question 11 (1 point)
In equilibrium, total consumer surplus is CS=
Question 11 options:
128 | |
169 | |
196 | |
225 |
Question 12 (1 point)
In equilibrium, total welfare is W=
Question 12 options:
225 | |
256 | |
281 | |
312 |
Stackelberg
The next questions refer to the Stackelberg Leader Follower model. Assume Firm 1 is the leader.
Question 13 (1 point)
What is the leader's total revenue function?
Question 13 options:
TR1=42q1 -1.5q12 | |
TR1 =30q1 -1.0q12 | |
TR1 =18q1 -0.5q12 | |
TR1=6q1-0.25q12 |
Question 14 (1 point)
What is the leader's marginal revenue function?
Question 14 options:
MR1=6-0.5q1 | |
MR1 =18-1q1 | |
MR1 =30-2q1 | |
MR1 =42-3q1 |
Question 15 (1 point)
What is the leader's chosen optimum quantity q1*=
Question 15 options:
6 | |
9 | |
12 | |
15 |
Question 16 (1 point)
What is the follower's s optimum quantity q2*=
Question 16 options:
6 | |
9 | |
12 | |
15 |
Question 17 (1 point)
The market price in equilibrium will be P*(q1+q2)=
Question 17 options:
12 | |
14 | |
16 | |
18 |
Question 18 (1 point)
In equilibrium, the leader's profit is 1=
Question 18 options:
36 | |
72 | |
108 | |
144 |
Question 19 (1 point)
In equilibrium, the follower's profit is 2=
Question 19 options:
36 | |
72 | |
108 | |
144 |
Question 20 (1 point)
In equilibrium, consumer surplus is CS=
Question 20 options:
132 | |
142 | |
152 | |
162 |
Question 21
In equilibrium, total welfare is W=
Question 21 options:
270 | |
280 | |
290 | |
300 |
Cartel
For the next questions assume that Firm 1 and Firm 2 form a cartel (thus acting together like a monopolist).
Question 22
What will be the cartel's marginal revenue function? (where Q=q1+q2)
Question 22 options:
MRC=30-Q | |
MRC=30-2Q | |
MRC=30-3Q | |
MRC=30-4Q |
Question 23
The cartel's profit maximizing price is PC*=
Question 23 options:
6 | |
12 | |
14 | |
18 |
Question 24
The cartel's profit maximizing quantity is Q*=
Question 24 options:
12 | |
14 | |
18 | |
20 |
Question 25
Consumer surplus under the cartel solution is CS =
Question 25 options:
50 | |
72 | |
98 | |
128 |
Question 26
Total producer surplus (cartel rent) under the cartel solution is equal to PS =
Question 26 options:
100 | |
144 | |
196 | |
256 |
Question 27
Total welfare under the cartel solution is equal to W=
Question 27 options:
150 | |
216 | |
294 | |
384 |
Bertrand
The next questions refer to Bertrand competition.
Question 28
Betrand criticized the Cournot model. Bertrand's point of criticism was that firms cannot be assumed to compete through
Question 28 options:
quantities supplied | |
qualities produced | |
prices set | |
product differentiation |
Question 29 (1 point)
In equilibrium, Bertrand competition is equivalent to the model of
Question 29 options:
Monopolistic competition | |
Perfect competition | |
Unfair competition | |
Ruinous competition |
Question 30 (1 point)
Which statement is true? In equilibrium,
Question 30 options:
The cartel equilibrium price is highest | |
The Stackelberg leader-follower equilibrium price is higher than the Cournot duopoly equilibrium price | |
Both a. and b. are correct. | |
None of the above is correct. |
Step by Step Solution
3.52 Rating (186 Votes )
There are 3 Steps involved in it
Step: 1
Lets go through each question one by one Cournot Duopoly Question 1 What is Firm 1s total revenue function The total revenue function is calculated by multiplying the price P by the quantity q1 TR1 P ...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started