Assume that the demand for Product A is given by P = 100 - Q. All...

 

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Assume that the demand for Product A is given by P = 100 - Q. All firms in the market use the same technology, and the total cost functions of all firms are identical, C; = 20Qi, (subscript i denotes the ith firm). a) Assume the market is perfectly competitive. Find the equilibrium price and total quantity supplied. b) Assume that there is only one firm. Find the equilibrium price and the quantity supplied. c) Assume that there are 4 firms in the market and they set the quantity (the Cournot model). Find the equilibrium price and total quantity supplied. d) Assume that there are 4 firms in the market, and 2 of these firms merge together. Is merger profitable for those who will merge? (Assume the Cournot Model and no change in the cost function.) e) Assume that there are 4 firms in the market and they set the product price (the Bertrand model). Find the equilibrium price and total quantity supplied. f) Assume that there are 4 firms in the market and they set the quantity. One of the firms is the leader, and all others are followers, i.e., the leader firms knows how the followers behave (the Stackelberg model). Find the equilibrium price and the quantity supplied by each firm. g) Find the values of the Lerner index for "c" and "f". Which market is more competitive? Why? Assume that the demand for Product A is given by P = 100 - Q. All firms in the market use the same technology, and the total cost functions of all firms are identical, C; = 20Qi, (subscript i denotes the ith firm). a) Assume the market is perfectly competitive. Find the equilibrium price and total quantity supplied. b) Assume that there is only one firm. Find the equilibrium price and the quantity supplied. c) Assume that there are 4 firms in the market and they set the quantity (the Cournot model). Find the equilibrium price and total quantity supplied. d) Assume that there are 4 firms in the market, and 2 of these firms merge together. Is merger profitable for those who will merge? (Assume the Cournot Model and no change in the cost function.) e) Assume that there are 4 firms in the market and they set the product price (the Bertrand model). Find the equilibrium price and total quantity supplied. f) Assume that there are 4 firms in the market and they set the quantity. One of the firms is the leader, and all others are followers, i.e., the leader firms knows how the followers behave (the Stackelberg model). Find the equilibrium price and the quantity supplied by each firm. g) Find the values of the Lerner index for "c" and "f". Which market is more competitive? Why?

Answer rating: 100% (QA)

a In a perfectly competitive market each firm is a price taker meaning they take the market price as given and can sell as much as they want at that price So the equilibrium price is the price at whic... View the full answer