+1-415-670-9189
info@expertsmind.com
Firms operating under cournot competition or cournot market
Course:- Microeconomics
Reference No.:- EM1355




Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Microeconomics

Question: Suppose three identical firms are engaged in Cournot competition in quantities. They all have marginal costs equal to 40.

Market demand is given by:

P(X) = 200 - X = 200 - (x1 + x2 + x3), where P denotes price, X total quantity demanded, and xi individual demand for firms i = 1,2, and 3.

a) Explain in what type of markets Cournot type competition can occur. Write down the demand curve and marginal revenue curve for firm 1.

b) What is the first order condition for profit maximization for firm 1? Compute the optimum quantity x1* for firm 1 as a function of quantities x2 and x3.

c) Since the firms are identical, symmetrical solutions exist also for the two other firms. Use this to compute the optimum quantity produced (and sold) for each firm.

d) Compute total demand, X, and market price, P. Compute each firm's profit, πi, and the sum total of all profits.

Summary:

The details about three identical firms operating in Cournot competition are given. The demand curve with marginal revenue, profit maximization, optimum quantity, total demand and market price related questions are answered.




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Microeconomics) Materials
Demand occurs when a hairdresser raises the price of haircuts and the salon experiences a decline in the number of customers - Price elasticity of demand measures the responsi
"For the first time in several decades, Russia's great resource abundance, scientific and technological capabilities, and educated, skilled and enterprising population are n
In what way (or ways) is the current Knowledge Revolution a child of the Industrial Revolution? Is this a new revolution or simply an extension of the 18th-century revolution?
"Perfect Competition" Please responds to the following: Examine a perfectly competitive firm that you have recently purchased a product from, focusing specifically on how it r
A random sample of 12 lunch orders at Noodles and Company showed a mean bill of $12.99 with a standard deviation of $4.6. Find the 98 percent confidence interval for the mean
Given the demand and cost estimates, what price should you change if you want to maximize your weekly profit?What output should you produce? What is your weekly profit?
For the Japanese female face, y¯ = 10.2% and s = 31.3%. The researchers used this sample information to test the null hypothesis of a mean level of feminization equal to 0%.
Cranford Cranberry Bogs just purchased new water- whipping equipment for $100,000. Cranford agreed to repay the loan over a period of 10 years with semi- annual payments. Th