Suppose two firms compete in a market given by the demand curve P=325-Q, where Q=q1+q2, and...
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Suppose two firms compete in a market given by the demand curve P=325-Q, where Q=q1+q2, and the cost function MC=AC=75 is the same for all players. a) If these firms compete on quantity, and player 1 and player 2 move simultaneously, what will be the quantities set by each firm and the market clearing price? b) If these firms compete on quantity, where player 1 moves first, then player 2 moves, what will be the quantities set by each firm and the market clearing price? c) Suppose a third player joins, such that Q=q1+q2+q3. Given the demand and cost curves above, if these firms compete on quantity, where player 1 moves first, then player 2 moves, then player 3 moves, what will be the quantities set by each firm and the market clearing price? d) What is the maximum amount player 2 would be willing to pay to move at the same time as player 1, if anything, with player 3 then moving afterwards? Suppose two firms compete in a market given by the demand curve P=325-Q, where Q=q1+q2, and the cost function MC=AC=75 is the same for all players. a) If these firms compete on quantity, and player 1 and player 2 move simultaneously, what will be the quantities set by each firm and the market clearing price? b) If these firms compete on quantity, where player 1 moves first, then player 2 moves, what will be the quantities set by each firm and the market clearing price? c) Suppose a third player joins, such that Q=q1+q2+q3. Given the demand and cost curves above, if these firms compete on quantity, where player 1 moves first, then player 2 moves, then player 3 moves, what will be the quantities set by each firm and the market clearing price? d) What is the maximum amount player 2 would be willing to pay to move at the same time as player 1, if anything, with player 3 then moving afterwards?
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The image contains a question which is about market competition among firms that set quantities simultaneously or sequentially To solve these we should analyze the market in both scenarios of Cournot ... View the full answer
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