Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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 ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial economics

Authors: william f. samuelson stephen g. marks

7th edition

9781118214183, 1118041585, 1118214188, 978-1118041581

More Books

Students also viewed these Economics questions