Consider the market demand for oil is given as P = 400-2Q and the firm total...
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Consider the market demand for oil is given as P = 400-2Q and the firm total cost is given as TC = 1000. The market consists of two Cournot firms: Firm A; Firm B. a. What is the best response (reaction) function of Firm A? Show your work. b. What is the best response (reaction) function of Firm B? Show your work. c. How much quantity will each firm produce in a Cournot equilibrium? Show your work. d. What will be the price set in this Cournot equilibrium? Show your work. e. Draw the best response functions (BRA & BRB) from part a. and b., and represent the Cournot equilibrium (q; & qB) from c. qB qA f. Now assume that the firms are Stackelberg where Firm A is the leader and Firm B is the follower. How much quantity will each firm produce in a Stackelberg? Show your work. g. What is the price set in a Stackelberg equilibrium? Also, what are the profits for each firm in a Stackelberg equilibrium? Show your work. Consider the market demand for oil is given as P = 400-2Q and the firm total cost is given as TC = 1000. The market consists of two Cournot firms: Firm A; Firm B. a. What is the best response (reaction) function of Firm A? Show your work. b. What is the best response (reaction) function of Firm B? Show your work. c. How much quantity will each firm produce in a Cournot equilibrium? Show your work. d. What will be the price set in this Cournot equilibrium? Show your work. e. Draw the best response functions (BRA & BRB) from part a. and b., and represent the Cournot equilibrium (q; & qB) from c. qB qA f. Now assume that the firms are Stackelberg where Firm A is the leader and Firm B is the follower. How much quantity will each firm produce in a Stackelberg? Show your work. g. What is the price set in a Stackelberg equilibrium? Also, what are the profits for each firm in a Stackelberg equilibrium? Show your work.
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Related Book For
Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba
Posted Date:
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