1. Suppose Firm 1 is a monopoly in the chocolate market. The inverse demand function is...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
1. Suppose Firm 1 is a monopoly in the chocolate market. The inverse demand function is Pm 100 2Qm and the cost function is Cm = 100m- a) What is the profit maximizing quantity Qm for Firm 1? b) What is the profit maximizing price Pm for Firm 1? = = Now, suppose Firm 2 enters the market, and the market is characterized by Stackelberg equilibrium. Let Firm 1 be the leader and Firm 2 be the follower. The inverse demand is still P 100 - 2Q where Q is q₁ +92 in this case. The cost that is faced by each firms is given by: C₁ 10q, where i = 1,2 = c) What are the profit maximizing quantity for firm 1 and firm 2? d) What is the profit maximizing price? e) Suppose the firms behave as price takers (perfectly competitive market), compute the equilibrium price and quantity. f) Compute the consumer surplus and welfare loss (deadweight loss) in each imperfectly competitive market (monopoly market and duopoly market-Stackelberg). Now, suppose both firms set quantity simultaneously, and the market is characterized by Cournot equilibrium. The inverse demand is still P = 100 2Q where Q is q₁ +92. The cost that is faced by each firms is given by: C₁ = 10q, where i = 1,2. g) What are the profit maximizing quantity for firm 1 and firm 2? h) What is the profit maximizing price? i) Compute the welfare loss (deadweight loss). j) Rank the equilibrium prices from high to low for four markets (perfectly competitive market, duopoly-Stackelberg, duopoly-Cournot and monopoly). 1. Suppose Firm 1 is a monopoly in the chocolate market. The inverse demand function is Pm 100 2Qm and the cost function is Cm = 100m- a) What is the profit maximizing quantity Qm for Firm 1? b) What is the profit maximizing price Pm for Firm 1? = = Now, suppose Firm 2 enters the market, and the market is characterized by Stackelberg equilibrium. Let Firm 1 be the leader and Firm 2 be the follower. The inverse demand is still P 100 - 2Q where Q is q₁ +92 in this case. The cost that is faced by each firms is given by: C₁ 10q, where i = 1,2 = c) What are the profit maximizing quantity for firm 1 and firm 2? d) What is the profit maximizing price? e) Suppose the firms behave as price takers (perfectly competitive market), compute the equilibrium price and quantity. f) Compute the consumer surplus and welfare loss (deadweight loss) in each imperfectly competitive market (monopoly market and duopoly market-Stackelberg). Now, suppose both firms set quantity simultaneously, and the market is characterized by Cournot equilibrium. The inverse demand is still P = 100 2Q where Q is q₁ +92. The cost that is faced by each firms is given by: C₁ = 10q, where i = 1,2. g) What are the profit maximizing quantity for firm 1 and firm 2? h) What is the profit maximizing price? i) Compute the welfare loss (deadweight loss). j) Rank the equilibrium prices from high to low for four markets (perfectly competitive market, duopoly-Stackelberg, duopoly-Cournot and monopoly).
Expert Answer:
Answer rating: 100% (QA)
a The profit maximizing quantity Qm for Firm 1 is 20 b The profit maximizing price Pm for Firm 1 is 80 c The profit maximizing quantity for firm 1 and firm 2 are q117 and q23 d The profit maximizing p... View the full answer
Related Book For
Calculus Early Transcendentals
ISBN: 9781337613927
9th Edition
Authors: James Stewart, Daniel K. Clegg, Saleem Watson, Lothar Redlin
Posted Date:
Students also viewed these economics questions
-
Assume that consumers view tax preparation services as undifferentiated among producers, and that there are hundreds of companies offering tax preparation in a given market. The current market...
-
Suppose that a firm produces two outputs with cost function C where C(q) = q + 2q3 + 10 given output levels q = (q1, 92) > 0. You could disregard the nonnegativity constraints on q and think of this...
-
The Plymouth Software Company has the following demand curve with MC = $10 and P = 100 Q with MR = 100 2Q. The company has option of charging monopolist price or perfect competitor price. Here it...
-
A solid conducting cylinder of radius 0.1 m and mass of 4 kg rests on horizontal conducting rails (Figure). The rails, separated by a distance a?= 0.4 m, have a rough surface so the cylinder rolls...
-
The Securities and Exchange Commission (SEC) requires specific disclosures about executive compensation for public companies. The following Web pages contain information about SEC executive...
-
4) [10] Consider a world with one risk-free asset and a large number of risky assets, none of which are perfectly correlated (positively or negatively) with each other. a) On the graph below, draw in...
-
In his 2023 State of the Union address, President Joe Biden stated, As I stand here tonight, we have created a record 12 million new jobs. Is it likely that the U.S. economy created only 12 million...
-
Crystal Clear Products produces two types of water filters. One attaches to the faucet and cleans all water that passes through the faucet. The other is a pitcher-cum-filter that only purifies water...
-
1. Your program asks the user how many bananas they want to buy, and what the price is. This information is then passed to getTotal to calculate the total cost. System.out.println("How many bananas...
-
Can establishing a multinational corporation or a joint venture serve the principles of social entrepreneurship? Would some options lend themselves better to social entrepreneurship than others? What...
-
An order for a 148 lb patient is for 0.03 g/kg/hour for 2 hours bid. The medication is delivered in a 650 mg mixed in 250 ml bag of NSS. The setup is 10 gtt/mL. What is the flow rate in gtt/min?
-
Adams, who reads with difficulty, arranged to borrow \($2,000\) from Bell. Bell prepared a note, which Adams read laboriously. As Adams was about to sign it, Bell diverted Adamss attention and...
-
On September 2, 2012, Levine executed a mortgage bond under which she promised to pay the Mykoffs a preexisting obligation of $54,000. On October 14, 2015, the Mykoffs transferred the mortgage to...
-
On December 2, 2016, Miles executed and delivered to Proctor a negotiable promissory note for \($1,000,\) payable to Proctor or order, due March 2, 2017, with interest at 14 percent from maturity, in...
-
McLaughlin borrowed \($10,000\) from Adler, who, apprehensive about McLaughlins ability to pay, demanded security. McLaughlin indorsed and delivered to Adler a negotiable promissory note executed by...
-
Sandra and Thomas McGuire entered into a purchase-and-sale agreement for Beccas Boutique with Pascal and Rebecca Tursi. The agreement provided that the McGuires would buy the store for \($75,000,\)...
-
The members of the truss shown are to be made from solid circular rods. What rod. diameter is needed for the normal stress to be 100 MPa in (a) member EG, (b) member FG? 15 kN 15 kN 15 kN A E 4m B D...
-
Question 2 For an n x n matrix A = form) via (aij)
-
A car is traveling north on a straight road at 20 m/s and a drone is flying east at 6 m/s at an elevation of 25 m. At one instant the drone passes directly over the car. How fast is the distance...
-
Evaluate the integral. (/3 ytan 0 /4 sin 20 OP
-
Differentiate the function. y = ln a /b
-
Consider a strictly risk averse agent endowed with initial wealth \(w_{0}\) and with a strictly increasing and twice differentiable utility function. Let \(r_{f}\) and \(\tilde{r}\) denote the return...
-
Consider the optimal portfolio choice problem in the presence of \(N\) risky assets with returns \(\left(\tilde{r}_{1}, \ldots, \tilde{r}_{N} ight)\) and of a risk free asset with return \(r_{f}>0\)....
-
Consider a quadratic utility function \(u(x)=x-\frac{b}{2} x^{2}\), an initial wealth \(w_{0}=100\), a risk free rate \(r_{f}=1.1\) and a risky asset with expected return...
Study smarter with the SolutionInn App