Question: Consider a duopoly.Market demand is given by: P = 90 - Q, and each firm has constant AC=MC=18. A.Suppose the firms operate as Cournot duopolists.

Consider a duopoly.Market demand is given by: P = 90 - Q, and each firm has constant AC=MC=18.

A.Suppose the firms operate as Cournot duopolists. Derivethe Cournot equilibrium firm outputs, market output, market price and profit to each firm.

B.Suppose instead, the firms operate as Bertrand duopolists.What is the Bertrand equilibrium price, market output, and profit to each firm?

C.Compute the value of the Lerner index for each of the two outcomes (in Part A and Part B) above.

D.Without performing any calculations, what happens to the value of the Lerner index in each case (Cournot and Bertrand) as the number of symmetric firms in the oligopoly increases?Explain.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

Consider the following capacity/entry deterrence problem. Suppose market demand is given by P = 90 Q . Firms have a constant marginal cost of 30. Of this cost, 20 is the cost of building capacity and...

Macro quiz answer. EC202-5-FY 10 9 Answer both parts of this question. (a) Firm A and Firm B produce a homogenous good and are Cournot duopolists. The firms face an inverse market demand curve given...

its maccro i need detailed answers Exercises Question 1 ("Review of Production and Cost Functions, and Prot Mardoiization} Suppose each worker costs $1130 to hire. An example firm has the following...

Question 1 Consider two firms competing under Bertrand Price Competition and they have the following total costs of production, TC1 =1001 TC2 =1002 In other words, both firms have constant marginal...

Q6 . (20 Marks ) Two firms serve a market with demand given by Q = 200 - P. There are no other suppliers . Firm One constant marginal costs of 19 dollars per unit it produces while has firm two...

Q1... microeconomics Exercises Question 1 ("Review of Production and Cost Functions, and Prot Mardoiization} Suppose each worker costs $1130 to hire. An example firm has the following production and...

PROVIDE APPROPRIATE ANSWERS FOR THE FOLLOWING QUESTIONS PLEASE Consider n identical firms, which produce a perfectly homogenous good at constant marginal cost c. The market demand is given by p = a -...

2. Consider n identical firms, which produce a perfectly homogenous good at constant marginal cost c. The market demand is given by p = a - Q, where Q is the total output produced in the industry....

PART A ? Questions 1 ? 7 Consider a market where demand is D: P = 30 ? Q and supply is S: P = 0.5Q. Equilibrium quantity Qe is 17 18 19 20 Equilibrium is price Pe $10 $11 $12 $13 Consumer surplus CS...

Economic order quantity, effect of parameter changes (continuation of 20-16). Athletic Textiles (AT) manufactures the Galaxy jerseys that Fan Base (FB) sells to its customers. AT has recently...

Performance Tasks PT 1- Regression Analysis 1 2 3 4 5 6 7 8 9 2. 3. 4. Xt 5.0 0 5.0 6 5.1 2 5.1 0 5.3 yt 0.31 8 0.33 0 0.35 6 0.33 4 0.38 t 10 11 12 13 2 14 15 16 Xt 6.1 6 6.2 6.3 1 6.3 17 8 18 6.5...

22. Members of the jury, you have heard Shirley Gaines testify that the defendant did not off er to perform acts of prostitution for the undercover police offi cer. But Gaines is a known prostitute...

Journey Publishing was recently organized. The company issued common stock to an attorney who provided legal services worth $15,000 to help organize the corporation. Journey Publishing also issued...

Prior to liquidating their partnership, Wakefield and Barns had capital accounts of $105,000 and $55,000, respectively. The partnership assets were sold for $40,000. The partnership had no...

Prior to liquidating their partnership, Manning and Adamo had capital accounts of $240,000 and $150,000, respectively. Prior to liquidation, the partnership had no cash assets other than what was...

John Prado and Ayana Nicks formed a partnership, dividing income as follows: 1. Annual salary allowance to Prado, $10,000 and Nicks, $28,000. 2. Interest of 5% on each partner's capital balance on...

1. What does Rawls mean when he states that justice is the first virtue of social institutions? 2. How does he describe what he calls the original position and the veil of ignorance, from behind...

Question 3 2 0 pts In his January 2 0 0 7 presentation to introduce the iPhone, Steve Jobs placed a prank call to which of the following? A Starbucks location An Apple store One of his college...

2. In this chapter, the reader should reflect on the following concepts: Idealized system design, analogue thinking, contrast principle, consistency principle, reciprocity principle, scarcity...

2. A Soviet invasion of Poland would lead to the severing of diplomatic relations between the United States and the Soviet Union.

1. Diplomatic relations between the United States and the Soviet Union would be severed in 1993 than that