Consider two firms facing the market demand curve p 100 -

Reference no: EM13374818

Consider two firms facing the market demand curve P = 100 - Q, where P is in $/unit, Q is total output, Q = Q1 + Q2, Q1 is the output of firm-1 and Q2 is the output of firm-2. Both firms have identical cost functions. Marginal cost of production is $10.

a. Suppose (as in the Cournot model) that each firm chooses its profit-maximizing level of output on the assumption that its competitor's output is fixed.

I. Find each firm's "reaction function".

III. What will industry output and price be at equilibrium in this model?

b. If firm-1 operates like a Stackelberg leader, what output would it produce in this case?

c. If firm-2 is the Stackelberg follower, how much output will it produce?

d. What will industry output and price be at equilibrium in the case of Stackelberg model?

Reference no: EM13374818

Questions Cloud

This activity will require you to access at least a portion : this activity will require you to access at least a portion of the federal budget as well as a state local and an

It is estimated that a particular economy has a multiplier : it is estimated that a particular economy has a multiplier of 2. the marginal propensity to import of the economy is

Panther airlines pa is the only airline that flies several : panther airlines pa is the only airline that flies several routes. they have a potential competitor leopard airlines la

Interest rates and saving with constant elasticity of : interest rates and saving with constant elasticity of substitution utility. a country?srepresentative individual has a

Consider two firms facing the market demand curve p 100 - : consider two firms facing the market demand curve p 100 - q where p is in unit q is total output q q1 q2 q1 is the

Fiscal policy provide data and analysis for the government : fiscal policy provide data and analysis for the government receipts types of taxes average tax rate the government

1 indifference curves are convex to the origin ifa a : 1. indifference curves are convex to the origin ifa. a persons marginal rate of substitution declines a he or she

Question 1 consider the multiple regression modelsuppose : question 1. consider the multiple regression modelsuppose that assumptions mlr.1-mlr4 hold but not assumption mlr.5a

Theorem a triangle and its medial triangle have the same : theorem a triangle and its medial triangle have the same centroid.scenariothe medial triangle of a triangle abc has

User Account

All Pages