Reference no: EM132428815
(Profit maximization under different product market structure)
Suppose the market demand is Q=100-P. You are asked to find out how this market operates under perfect competition, monopoly and oligopoly, with the same market demand and cost structure for each firm.
Required:
Question 1: Suppose the industry is perfectly competitive. The long-run cost function of each firm is c(Q)=2Q. Calculate the market price, total quantity supplied of the market, and each firm's profit (in the long run).
Question 2: Suppose there is a single firm serving the whole market, i.e. it is a monopolist. The cost function of the firm is c(Q)=2Q. Calculate the total quantity supplied of the market, the market price, and the firm's profit. How do they compare with a)?
Question 3: Suppose the market is under duopoly. There are two identical firms playing Cournot competition, and the cost function of each firm is c(Q)=2Q. Calculate the total quantity supplied of the market, the market price, and each firm's profit. How do they compare with b)?
Question 4: Suppose there are 3 identical firms playing Cournot competition, and their cost function of each firm is c(Q)=2Q. Calculate the total quantity supplied of the market, the market price, and each firm's profit. How do they compare with c)?
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