The goods market comprises 2 firms, Firm A and Firm B, with market demand: P =...

 

Transcribed Image Text:

The goods market comprises 2 firms, Firm A and Firm B, with market demand: P = 48 - 0.5Q where Q = qat qu Given their big sizes and acquiring capital through renting, their marginal costs (MC) and average costs are zero. 1.1) (3 points) From above, draw a graph showing the market demand and the demand, marginal revenue (MR) and output (q.) of Firm A in the case that Firm B produces 10. (your points depend on the details). 1.2) (5 points) From above, Firm A has a reaction function lo Firm B's oulpul ax: q4 = 48 – 0.54k whereas Firm B has a reaction function to Firm A's oulpul as: qu = 48 –0.5q4. Find market oulput (Q), market price, qa, qR. profits of Firms A und Bul the equilibrium points. (Hlint: You may only illustrate by graph und tuble and need not calculating, but calculating add extra points). 1.3) (5 points) If later Firm A acquire more data and become a leader as in the Stackelberg model, calculating for market output (Q), market price, qa. qu. profits of Firms A and Bat the equilibrium points by using all above details. 14) (2 points) Compare market output (Q), market price, qA. qn. profits of Firms A and B at the equilibrium points in 1.2) and 1.3). Describe in which case the numbers are bigger (Table and graph summarizing the details add extra points). The goods market comprises 2 firms, Firm A and Firm B, with market demand: P = 48 - 0.5Q where Q = qat qu Given their big sizes and acquiring capital through renting, their marginal costs (MC) and average costs are zero. 1.1) (3 points) From above, draw a graph showing the market demand and the demand, marginal revenue (MR) and output (q.) of Firm A in the case that Firm B produces 10. (your points depend on the details). 1.2) (5 points) From above, Firm A has a reaction function lo Firm B's oulpul ax: q4 = 48 – 0.54k whereas Firm B has a reaction function to Firm A's oulpul as: qu = 48 –0.5q4. Find market oulput (Q), market price, qa, qR. profits of Firms A und Bul the equilibrium points. (Hlint: You may only illustrate by graph und tuble and need not calculating, but calculating add extra points). 1.3) (5 points) If later Firm A acquire more data and become a leader as in the Stackelberg model, calculating for market output (Q), market price, qa. qu. profits of Firms A and Bat the equilibrium points by using all above details. 14) (2 points) Compare market output (Q), market price, qA. qn. profits of Firms A and B at the equilibrium points in 1.2) and 1.3). Describe in which case the numbers are bigger (Table and graph summarizing the details add extra points).

Answer rating: 100% (QA)

Marcket Demand P48 058 where B WA aVB Marginal costs aud average the firms costs ace Zero for both ... View the full answer