Calculate market equilibrium price and quantity, Macroeconomics

We will continue with the familiar demand curve homework the previous section

Let the market demand for goods be with a linear curve:

   (p =A qD/10),

where it is known that the maximum consumer willingness to pay (waiver price) is equal to 64

But now the thing is going on a little differently.

Two identical production technology companies produce a product.

 (the cost function C(qi)= a+bqi  (there is a fixed cost!)).

Suppose that each company's production capacity is so large that its output could saturate the market.

If this market would be fully competitive, then the equlibrium price would be so that the object of utilities market demand would be unitelastic. But now there are only two providers in this market is so ... (what form and what type of competition in the market?)

It depends on the market equilibrium solution (equilibrium price and quantity) participants' behavior, and also depends on the distribution of welfare between consumers and producers a profit-sharing between manufacturers. Make calculations and analyze the results (answers in the table)!

1. Participants behave as profit independent maximizers (Cournot solution). Why is this a permanent solution?

2. One of the participants (select which one!) Decided to become a volume leader, hoping that by acting as a second (Stackelberg solution). Why this solution is not likely to be permanent? What next for short view, and what happens in the long term?

3. Participants enter into a cartel agreement. What happens when one (choose which one!) Decides to violate the treaty?

 

Price

Quantity

Profit(1)

Profit (2)

Branch profit

Cournot'

 

 

 

 

 

Stackelberg

 

 

 

 

 

Kartell

 

 

 

 

 

Leppe rikkumine

 

 

 

 

 

What is the most favorable outcome from the consumer and the producers (think short term and long-term!)

Suppose, now, finally, that the Cournot model, the balance of the market enters another provider who acts as an independent profit maximizer. Scroll to the market equilibrium price and quantity.

Posted Date: 3/7/2013 12:22:50 AM | Location : United States







Related Discussions:- Calculate market equilibrium price and quantity, Assignment Help, Ask Question on Calculate market equilibrium price and quantity, Get Answer, Expert's Help, Calculate market equilibrium price and quantity Discussions

Write discussion on Calculate market equilibrium price and quantity
Your posts are moderated
Related Questions
1.  Assume the required reserve-deposit ratio is 12%, and the currency-deposit ratio is 38%. How much would money supply change if the Fed made open market purchases of $100 millio

Give brief Introduction about Interest rate When you borrow money, you usually have to pay a fee for the loan. This fee is often called interest, particularly if the fee is pr

The yeild of Maize is 73429 Hg/Ha, I need to translate it into bu/a, and I konw use 56lbs/bu as test weight. Please leave the process so that I know how to do it, thankyou.

what are the three motives of holding money?

Give an example of a current event opportunity cost that includes graphs

Long-Run Labor Demand: Graph an increase in the wage when only labor is a 'normal' input to production. Graph an increase in the wage when both inputs are 'normal'

For retirement planning, you decided to deposit $1,000 per month and increase your deposit by $100 per month. How much will you have at the end of 10 years if the bank pays 3% annu

Q. Explain the problem involved in consumer price Index? To explain the problems involved in calculating CPI we consider MP3 players. If you measure the average price of MP3 pl


Lucas’ point of view, what are the limitations of the Keynesian model? What improvements does he suggest?