. = = . . Consider a market with two identical firms: Firm A and Firm B. The market demand is P = 44 2Q, where Q = 9A + 9B and the firms cost structure is such that MCA = MCB = ACA = ACB = 5. The Cournot-Nash equilibrium results in firm outputs of a 6.5 and 98 = 6.5. Market price is PC-N = $18 and the firms earn profits of TA = $84.5 and TB = $84.5. If these firms were to act as a cartel (perfect collusion) maximizing joint profit, the output for each firm is 4.88, market price is P Cartel = $24.5 and each firm earns profit of $95.06. = = Suppose now that the firms act as perfect competitors. What are firm outputs, market price and profits? (Round to 2 decimal places.) (a) A = (b) 9B (c) Ppc = = (d) TA= (e) TTB = (f) Use your answers in (a)-(e) and those provided in the question above to rank according to allocative efficiency the three equilibria (Cournot, perfect collusion, and perfect competition). Rank each using 1 for best and 3 for worst. Equilibrium Rank (1, 2, or 3) Cournot-Nash Perfect Collusion Perfect Competition . = = . . Consider a market with two identical firms: Firm A and Firm B. The market demand is P = 44 2Q, where Q = 9A + 9B and the firms cost structure is such that MCA = MCB = ACA = ACB = 5. The Cournot-Nash equilibrium results in firm outputs of a 6.5 and 98 = 6.5. Market price is PC-N = $18 and the firms earn profits of TA = $84.5 and TB = $84.5. If these firms were to act as a cartel (perfect collusion) maximizing joint profit, the output for each firm is 4.88, market price is P Cartel = $24.5 and each firm earns profit of $95.06. = = Suppose now that the firms act as perfect competitors. What are firm outputs, market price and profits? (Round to 2 decimal places.) (a) A = (b) 9B (c) Ppc = = (d) TA= (e) TTB = (f) Use your answers in (a)-(e) and those provided in the question above to rank according to allocative efficiency the three equilibria (Cournot, perfect collusion, and perfect competition). Rank each using 1 for best and 3 for worst. Equilibrium Rank (1, 2, or 3) Cournot-Nash Perfect Collusion Perfect Competition