Suppose that the market demand curve for mineral water is given as Q-100-10P and marginal cost...

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Suppose that the market demand curve for mineral water is given as Q-100-10P and marginal cost is fixed at $4. Find the equilibrium price and quantity in each type of different market structure. Show your calculation (2 points for each subquestion). a) Monopoly b) Coumot duopoly c) Stackelberg duopoly d) Bertrand duopoly (MR is fixed at the level of MC). e) Perfect competitive market (MR is fixed at the level of MC)

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Answer 1

Answer #1

a) Monopoly attains equilibrium where MR = MC.

From the demand curve, we find TR and derivative of TR is MR. After equating MR with MC we get equilibrium price and quantity.

b) Cournot model is the model in which firms compete on quantities.

c) Bertrand model is the model in which firms compete on prices.

loo- o a Mono Lu 2 usunat lo,-o,LQLO.LO,o mR lo-o.aq,一 0,ią. I mR = 10- o. L Q, 一 0rda

Solv 6- 0,1 Xv . G- c) Stackelb Model mc = 0 2

1 2 100-10(3.*)-10 (3.2) 2

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Answer 2

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