Question: The inverse demand function for diamonds is P = 150 - 2Q, where Q is the total output for all firms in the market. The

The inverse demand function for diamonds is P = 150 - 2Q, where Q is the total output for all firms in the market. The market for diamonds consists of two firms. Each firm has a marginal cost of 30 when producing diamonds. (a) (6 points) Find the Cournot equilibrium quantity for each firm, the resulting market price, and the profits for each firm. (b) (6 points) Find the Stackelberg equilibrium quantity for each firm, the resulting market price, and the profits for each firm supposing that Firm 1 is the industry leader. (c) (6 points) Assume the two firms collude and form a cartel. What is the resulting market price and profits for each firm

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!

The inverse demand function for diamonds is P = 150 2Q, where Q is the total output for all firms in the market. The market for diamonds consists of two firms. Each firm has a marginal cost of 30...

8.2 A competitive fertilizer market has many small firms. The inverse demand function for fertilizer is p = 40 - 2Q, where Q is a ton of fertilizer and p is the price per ton of fertilizer. The...

A competitive fertilizer market has many small firms. The inverse demand function for fertilizer is p = 40 - 2Q, where Q is a ton of fertilizer and p is the price per ton of fertilizer. The market...

Collusion Consider a market with two firms, 1 and 2, that manufacture a homogenous product. The inverse demand for the product is: P(Q) = 1200 - 2Q where Q is total output. Production costs for each...

Please answer these questions. The data is located in the "moving.png" picture. A B C D Hours Feet Large Elevator 2 24.00 545 3 Yes 3 13.50 400 2 Yes 4 26.25 562 2 No 5 25.00 540 2 No 6 9.00 220 1...

Please answer the following questions. A B C D Hours Feet Large Elevator 2 24.00 545 3 Yes 3 13.50 400 2 Yes 4 26.25 562 2 No 5 25.00 540 2 No 6 9.00 220 1 Yes 20.00 344 3 Yes 8 22.00 569 2 Yes 9...

There are 10 potential entrants into the market for tomatoes. All tomato growers are identical. They face a fixed cost of 500 if they choose to enter the market and then have a marginal cost of 10...

answ There are 10 potential entrants into the market for tomatoes. All tomato growers are identical. They face a fixed cost of 500 if they choose to enter the market and then have a marginal cost of...

ITS man explain all QUESTIONS for the Written Analysis General requirement: Assume you are addressing some concerns by the board of directors by answering the following questions listed in the...

Access and refer to the December 31, 2013, annual report for Samsung at www.samsung.com/us/aboutsamsung/investor_relations/financial_information/financial_statement.html. Required 1. Identify its...

Task-1: Tom, the manager of ABC company, has reviewed a draft of his financial statements. Tom receives a year-end bonus of 20% of the company income. The income statement was provided by the factory...

Households invest in corporate stock primarily through Blank _ _ _ _ _ _ and Blank _ _ _ _ _ _ . Multiple choice question. mutual funds; pension funds brokerage accounts; online trading accounts...

What is demand management in the context of business operations? Managing sales promotions to increase demand Managing resources to meet customer demand efficiently Managing customer demand through...

Understand highlights of legislation enacted in 1964 and beyond

Identify the services that are almost always, often, and occasionally provided by a human resources department

Acknowledge 1964 as the beginning of an effort by the federal government to shift considerable social responsibility to employers