Suppose the inverse demand for a particular good is given by P = 1200 – 12Q. Furthermore, th are only two firms, A and B. Firm A's marginal cost is a constant $25, and Firm B's marginal cost is constant $20. Assume these two firms engage in Stackelberg competition, where Firm A moves first. If we assume that the firm with the lowest costs could supply the entire market, then the deadweight loss due to the market power these two firms exert through Stackelberg competition equals $______. [Round your answer to two decimals 1

Suppose the inverse demand for a particular good is given by P = 1200 – 12Q. Furthermore, th are only two firms, A and B. Firm A's marginal cost is a constant $25, and Firm B's marginal cost is constant $20. Assume these two firms engage in Stackelberg competition, where Firm A moves first. If we assume that the firm with the lowest costs could supply the entire market, then the deadweight loss due to the market power these two firms exert through Stackelberg competition equals $______. [Round your answer to two decimals 1

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter13: best-practice Tactics: Game Theory

Section: Chapter Questions

Problem 1E

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Suppose we have two identical fırms A and B, selling identical products. They are the only firms in the market and compete by choosing quantities at the same time. The Market demand curve is given by P=390-Q. The only cost is a constant marginal cost of $14. Suppose Firm A produces a quantity of 57 and Firm B produces a quantity of 44. If Firm A decides to increase its quantity by 1 unit while Firm B continues to produce the same 44 units, what is the Marginal Revenue for Firm A from this extra unit? Enter a number only, no $ sign. Don't forget to include the negative sign if revenue decreases. 231
Suppose the inverse demand for a particular good is given by P = 1200-12Q. Furthermore, there are only two firms, A and B. Firm A's marginal cost is a constant $25, and Firm B's marginal cost is a constant $20. Assume these two firms engage in Cournot competition. If we assume that the firm with the lowest costs could supply the entire market, then the deadweight loss due to the market power these two firms exert through Cournot competition equals $. 4 [Round your answer to the nearest two decimals.]
In the domestic airline market, where companies compete on the number of seats they make available in the market measured in millions (x), the inverse of the demand for seats is pd(x) = 40 - 4x.Assume that there are 2 airlines: LON and Pacific Airlines. The marginal cost per seat of both airlines is 10:(a) Determine the market equilibrium (quantity produced by each firm, market price and profits). Graph(b) Assume that LON and Aerolineas del Pacifico collude and act as a monopoly. Calculate the number of seats (x) and the selling price.(c) What is the efficient number of seats that should be made available to consumers, and at what price would each seat be sold?
Gary's Gas and Frank's Fuel are the only two providers of gasoline in their town. Below is the demand schedule for the market of gasoline. Assume that the cost of producing gasoline is 3 per gallon (AC=3, FC-D0). Suppose that the two producers collude (split production and profits evenly), what are the joint profits of these two firms? Q demanded (in gallons) 10 12 4 Market price (in dollar) $22 $20 $18 $16 $14 $12 $10 $8 $6 $0 O $27 O None of these options is correct. $55 O $72 O $36 50 00 3)
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Q3. There are two firms selling differentiated products. Firm A faces the following demand for his product: e, = 20 – -P, + -P, 2. Firm B faces the following demand: 1 P. +-P, 2. 0, = 220- Assume that the marginal cost is zero both for firm A and firm B. What are the equilibrium prices of a simultaneous price competition? What would the equilibrium prices be if A is the leader and B is the follower?
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Consider a "Betrand price competition model" between two profit maximizing widget producers say A and B. The marginal cost of producing a widget is 4 for each producer. Each widget producer has a capacity constraint to produce only 5 widgets. There are 8 identical individuals who demand 1 widget only, and individuals value each widget at 6. If the firms are maximizing profits, then which of the following statement is true: a) Firm A and Firm B will charge 4 b) Firm A and Firm B will charge 6 c) Firm A and Firm B will charge greater than or equal to 5 d) None of the options are correct. Explain clearly.
Suppose that the market consists of 6 identical firms , that the market demand curve is P=200-2Q and that each firm's marginal cost is 32. The cournot equilibrium quantity per firm is q=_____________________ and the equilibrium quantity in the market is Q=______________________. The market price is P=$______________ per unit.
Question 2: A market is contested by two firms, A and B, who compete in selling a homoge- neous good. Market demand is given by Q = 240 3p, where p is the price of the good. Firm A has constant marginal costs of 20 as long as it produces 100 units or fewer. Every unit above 100 costs 75 to produce. Firm B has the cost function CB = Q3, where QB is the quantity produced by firm B. The firms sequentially choose prices. A is the market leader and chooses its price first; B chooses its price after observing A's price. If they charge the same price each sells half of the demand at that price. The firms cannot turn away customers. What is the equilibrium price in this industry?
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