+1-415-670-9189
info@expertsmind.com
Firms operating under cournot competition or cournot market
Course:- Microeconomics
Reference No.:- EM1358




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
For every penny that the price of gasoline goes up, the U.S Postal (USPS) service experiences a monthly fuel cost increase of $8 million. State what assumptions you need to
"Keynes argued that wage stickiness was probably a good thing, that wage and price ?exibility could easily be destructive of real economic stability. His reasoning went
When in?ation increased sharply in the 1970s, the savings rate increased. Evaluate the role of interest rates and current and future income in explaining this phenomenon.
Analyze the elasticity of demand for products within the selected industry relevant to Katrina's Candies. Determine the factors involved in making decisions about pricing th
The range of reserve requirements that the Board of Governors can set for net transaction accounts is a. 3 to 6 percent b. 8 to 14 percent c. 3 to 14 percent d. 0 to 9 percent
"we oppose a nationsl market for pollution rights, as this would put an undue burden on low-income households who would no longer be able to afford to drive cars or heat the
Since consumers' tastes are changing so rapidly, there is no reason to expect that statistical demand estimates derived from historical data will be accurate in the future.
Suppose martha's utility is given by U=1/2^2 +3y^2. what is formula for martha's rate of substitution? Is the marginal rate of substitution increasing or decreasing or constan