A. Suppose the market demand function facing three firms is Q-500 -2p. Each firm has a...

 

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A. Suppose the market demand function facing three firms is Q-500 -2p. Each firm has a marginal cost of $5 per unit. What is the cartel solution? Suppose instead that one of the firms could supply up to 100 units at MC= 4, and the other two firms had a marginal cost of $5. How would this alter the final output, price, and profit? (2 points) B. In a Cournot duopoly, each firm has marginal cost MC = 20, and market demand is Q = 100 - 0.5p. What are the best-response functions of each firm? What is the best output level for each? How does the total output level compare to the cartel output level? (1 point) C. Consider a market where the inverse demand function is P = 100 - Q. All firms in the market have a constant marginal cost of $10 and no fixed costs. Compare the deadweight loss in a monopoly, a Cournot duopoly with identical firms, and a Bertrand duopoly with homogeneous products. (2 points) A. Suppose the market demand function facing three firms is Q-500 -2p. Each firm has a marginal cost of $5 per unit. What is the cartel solution? Suppose instead that one of the firms could supply up to 100 units at MC= 4, and the other two firms had a marginal cost of $5. How would this alter the final output, price, and profit? (2 points) B. In a Cournot duopoly, each firm has marginal cost MC = 20, and market demand is Q = 100 - 0.5p. What are the best-response functions of each firm? What is the best output level for each? How does the total output level compare to the cartel output level? (1 point) C. Consider a market where the inverse demand function is P = 100 - Q. All firms in the market have a constant marginal cost of $10 and no fixed costs. Compare the deadweight loss in a monopoly, a Cournot duopoly with identical firms, and a Bertrand duopoly with homogeneous products. (2 points)

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