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
I want to know price and estimate time on this assignment.

farmer grows a bushel of wheat & sells it to a miller for Rs. 1.00. The miller turns the wheat into flour & then sells the flour to a baker for RS. 3.00. The baker uses the flour

An end-of-aisle price promotion changes the price elasticity of a good from -2 to -3. If the normal price is $10, what should the promotional price be?

An investor has a series of three $15,000 payments expected to be realized at the end of years three, four, and five. Calculate the present value P at time zero and the correspondi

a.  State concisely, in your own words, the essence i.of what GDP measures and ii.what GDP doesnot measure.  b.  Stocks and bonds issued by firms comprise the "Investment" co

what is a limitation of nation income

Who decides what goods services will be produced and sold in the US? Ans) It is mostly the American consumer. The US government also plays a big role in the nation's economy, co

Consider an economy characterized by the following Cobb-Douglas production function: Y=4K 1/4 L 3/4 Where K and L represent physical capitaland labor, respectively. Assume t


Roles of government in controlling market forces under neoclassical view