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A market is characterized by a demand curve that can be expressed as P = 96 – (1/3) Q. Each of the two identical firms currently serving the market has a total cost function of the form C = 12 q. There are no fixed costs. If the 2 duopolists behave as independent, symmetric Cournot duopolists, what are the equilibrium price, quantity, and profits for each of the firms? Show work. If the 2 duopolists behave collusively, what are the equilibrium price, quantity, and profits for each of the firms? Show work. Now create a payoff matrix in which the two firms are deciding between producing the Cournot duopoly quantity that you found in part a and producing the collusive quantity that you also found in part a. In other words, each firm has 2 strategies: produce the Cournot quantity and produce the collusive quantity. The payoffs for two cells in the matrix are the profits you calculated in part a. Complete the other two cells in your payoff matrix; that is, find the profits for each of the firms when one of the firms produces the Cournot quantity and the other firm produces the collusive quantity. (You will need to calculate a new market price in order to find the profit payoffs for these two cells.) Show work. Find the Nash equilibrium for the game. Explain. Explain how your payoff matrix represents a prisoner’s dilemma.
Assume that output is 1.6% below potential and that the inflation rate is 3.5%. Assume that the Fed has specified the inflation coefficient is á = 0.5 and that the natural real rate of interest is 2%. At what level should the Fed set the federal fund..
In competitive markets, the difference between price and marginal cost is a measure of profit per unit output which is what firm seeks to maximize.
As the mayor of a local town, I have the power to repeal workplace safety laws. How would repealing all workplace safety laws affect the wages of construction workers building the local school?
From a firms short run production function, the marginal product of labor and the average product of labor may be determined. The average product of labor is:
Suppose that you buy, and one year later sell, a foreign (British) bond under the following circumstances
Many people display something like hyperbolic discounting. Some businesses thrive on supporting this sort of short-term excess. For example, several establishments offer payday loans−short-term loans with ultrahigh interest rates designed to be paid ..
Explain four macroeconomics objective from conventional perspective
What would you expect to happen to the domestic money supply as R and Y both increase along a stable BB curve? Explain in intuitive terms what forces would tend to bring about such a change in the money supply.
Differentiation strategies vary in degree of effectiveness from one type of market structure to another. For firms other than perfect competition
Find out the total nominal money stock as measured by the Federal Reserve's definition of M1. What will happen to each of your answers to part a to e.
Can a for-profit business engaged in maximizing profits also be an ethical business? If so, why or why not? Include discussion of at least 1 ethical theory, refer to a least 2 materials assigned in Theme 2, and give at least 1 specific example to cla..
Indicate whether each of the following involves an upward or downward shift in the long run average cost curve or instead, involves a leftward or rightward movement along a given curve. Also indicate whether each will have an increasing, decreasing, ..
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