+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
Analyze how the law of demand applies to a recent purchase that you made. Describe how the product has changed in price and explain whether the price change is due to supply
The market supply and demand functions for a product traded on a perfectly competitive market are given below: QD = 40-P QS = -5 +4P. Based on this information, calcul
The following table lists the name, gender, and height and reservation wage of 10 persons willing to work as fire fighters in Timber Creek. What is the lowest wage that Timber
Identify each variable and explain the criteria involved in setting up the model. This should be encapsulated in one (1) or two (2) succinct paragraphs - Write a paragraph a
Regression (4) includes worker-level fixed effects. The coefficient on years of education falls from .0637 in (3) to .0167 in (4). Is this a large change in economic terms? Ex
JG Asset Services is recommending that you invest $1,500 in a 5-year certificate of deposit (CD) that pays 3.5% interest, compounded annually. How much will you have when the
If barriers to entry into a profession were absolute so that entry is not possible, what would the supply curve look like? What would the supply curve look like if entry into
describe why marginal analysis must be used in decision making with examples. Also, give examples of poor decision-making when sunk costs were used to justify choices, and d