HomeworkLib
Question

Short Answer 11. Suppose that the reaction function for firm 1 in a Coumot duopoly is qi 300- q/2, and that the reaction func
business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Solve the two reaction functions to get the optimal output for both the firms

Given that q1 = 300 - 0.5q2, we have q1 = 300 - 0.5*(280 - 0.5q1)

q1 = 160 + 0.25q1

This gives q1 = 160/0.75 = 213.34 units and q2 = 173.33 units.

0 0
Add a comment
Know the answer?
Add Answer to:
Short Answer 11. Suppose that the reaction function for firm 1 in a Coumot duopoly is...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • 5. Cournot Competition Consider a Coumot duopoly model. Suppose that market demand is P-a-qi Also suppose that the cost functions of the two firms are TG (q) = q, and T( (a) Write the profit func...

    5. Cournot Competition Consider a Coumot duopoly model. Suppose that market demand is P-a-qi Also suppose that the cost functions of the two firms are TG (q) = q, and T( (a) Write the profit function, and the first order condition. (b) Find out the profit maximizing output for each firm. (c) Find the pofit earned by each firm, total profit eamed by the two fims to (d) Now assume that the two firms collude and act as a monopoly....

  • What is the homogeneous-good duopoly Coumot equilbrium if the market demand function is Q 10,000-100p, and...

    What is the homogeneous-good duopoly Coumot equilbrium if the market demand function is Q 10,000-100p, and each fim's marginal cost is $0.28 per unit? The Cournot-Nash equilbrium occurs where q, equals and equals(Enter numenic responses u Furthermore, the equilibrium occurs at a price of (Round your answer to the nearest penny using real numbers rounded to two decimal places)

  • In Cournot duopoly , the inverse demand function is P=150-Q Firm 1 and Firm costs are...

    In Cournot duopoly , the inverse demand function is P=150-Q Firm 1 and Firm costs are C1=1000+12q1 and C2=2000+6q2 What is the profit maximization , best reaction function to find Nash equilibrium Price

  • Consider a duopoly Cournot game, where Firm 1 and Firm 2 have the same marginal cost...

    Consider a duopoly Cournot game, where Firm 1 and Firm 2 have the same marginal cost of production c = 3. The total quantity produced by the firms is Q. The demand function is p(Q) = 84 − Q. a.) Write down Firm 1’s profit function. b.) * Calculate Firm 1’s best-response function. c.) * Find the pure-strategy Cournot-Nash equilibrium of this game. d.) * Show that the firms make strictly positive profit in equilibrium. e.) Explain intuitively why the...

  • 400 1. A Coumot duopoly with homogeneous products has an inverse demand curve P 5(QA +...

    400 1. A Coumot duopoly with homogeneous products has an inverse demand curve P 5(QA + Qo) and costs are Ca(O) - 30QA and C(Qo) - 40 u. a. Determine the reaction function for each firm. b. Calculate each firm's equilibrium output and the market's equilibrium price. c. Calculate the profit each firm earns in equilibrium.

  • A homogeneous product duopoly faces a market demand function given by p = 300 - 3Q,where...

    A homogeneous product duopoly faces a market demand function given by p = 300 - 3Q,where Q = q1 + q2. Both firms have constant marginal cost MC = 100. 1a. Derive the equation of each firm's quantity reaction function. b. What are the Cournot equilibrium quantity and price in this market? How much does each firm produce? c. What would be the equilibrium price and quantity in this market if it were perfectly competitive? d. What would the equilibrium...

  • Suppose an industry has a duopoly structure. Duopolist 1 has a cost function given by: c1...

    Suppose an industry has a duopoly structure. Duopolist 1 has a cost function given by: c1 (y1) = (y1)2 for y1 ≥ 0 . Duopolist 2 has a cost function given by: c2(y2 ) = 12y2 for y2 ≥ 0. Denoting total output produced in the industry by y = (y1 + y2), the inverse demand function for the good produced in the industry is given by: p = 100 – y Find the reaction function of each duopolist. Using...

  • A homogeneous product duopoly faces a market demand function given by p = 300 - 3Q,where...

    A homogeneous product duopoly faces a market demand function given by p = 300 - 3Q,where Q = q1 + q2. Both firms have constant marginal cost MC = 100. (part 2) 1a. What is the Bertrand equilibrium price and quantity in this market? 1b. Suppose Firm 1 is the Stackelberg leader, what is the equilibrium price in this market if Firm 2 plays the follower in this duopoly market? What is the equilibrium quantity? How much does each firm...

  • Duopoly quantity-setting firms face the market demand p 270-Q Each firm has a marginal cost of...

    Duopoly quantity-setting firms face the market demand p 270-Q Each firm has a marginal cost of $15 per unit What is the Coumot equilibrium? The Cournot equilibrium quantities for Firm 1 (q1) and Firm 2 (42) are -85 units 02- 85units. (Enter numeric responses using real numbers rounded to two decimal places.) 10 and PM The Cournot equilbrium price is he Counot equilibrium? mot equilibrium quantities for Firm 1 (91) and Firm 2 (42) are 1 85 units 2 85...

  • 2. (Cournot Model) Consider a Cournot duopoly. The market demand is p=160 - q2. Firm 1's...

    2. (Cournot Model) Consider a Cournot duopoly. The market demand is p=160 - q2. Firm 1's marginal cost is 10, and firm 2's marginal cost is also 10. There are no fixed costs. A. Derive each firm's best response function B. What is the Nash equilibrium of this model? Find the equilibrium market price. C. Find the equilibrium profit for each firm D. Find the equilibrium consumer surplus in this market. 3. (Bertrand Model) Consider a Bertrand duopoly. The market...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT