Abouit the cournot equilibrium

Assignment Help Business Economics

Reference no: EM13869345

Cournot Equilibrium

The dancing machine industry is a duopoly. The two firms, Chuckie B corp and Gene Gene Dancing Machines, compete through Cournot quantity-setting competition. The demand curve for the industry is P = 120-Q, where Q is the total quantity produced by Chuckie B and Gene. Currently, each firm has marginal cost of $60 and not fixed cost.

First question is what is the equilibrium price, quantity, and profit for each firm? I got price:$80, Quantity (each):20, and Profit:$400.00

Part B is where I am struggling

Chuckie B corp. is considering implementing a proprietary technology with a one-time sunk cost of $200. Once this investment is made, marginal cost will be reduced to $40. Gene Gene has no access to this or any other cost saving technology, and its marginal cost will remain at $60. Should CHuckie B invest in the new technology? (Hint: you must compute cournot equilibrium)

Reference no: EM13869345

Questions Cloud

Interest rate on investments in the economy : Kenji is working for an advertising firm making $60,000 per year but considers starting his own advertising company. Kenji has determined that to launch the business, he needs to invest $100,000 of his own funds. Kenji plans to manage the business, w..

Clear duplicating service located : Ms. Smith, the owner and manager of the Clear Duplicating Service located near a major university, is contemplating keeping her shop open after 4 p.m. and until midnight. In order to do so, she would have to hire additional workers. If the price of e..

How much money will be available to the depositor at the end : A deposit of $3,000 is made in a savings account that pays 7.5 percent interest compounded annually. How much money will be available to the depositor at the end of 16 years?

Each player decides whether to work on a common project : Consider the following game: There are 3 players. Each player decides whether to work on a common project or not. The project is successful only if 2 or more players work on it. When the project is successful, each player obtains a payoff of 20. When..

Abouit the cournot equilibrium : The dancing machine industry is a duopoly. The two firms, Chuckie B corp and Gene Gene Dancing Machines, compete through Cournot quantity-setting competition. The demand curve for the industry is P = 120-Q, where Q is the total quantity produced by C..

Two firms are planning their marketing strategies : Firm K can earn $35 million in profits from strategy S if firm L responds with strategy P, and $7.5 million in profit from S if L responds with strategy Q. Firm K can follow strategy T, which returns $26 million if firm L responds with strategy P and..

Economic boom raises the cost of labor and raw materials : John Richards, CEO of Richards Construction builds custom high end garages for car collectors in a booming community in California. Although sales have slowed because of a national recession, it now looks as if the recession is about to end. Suppose ..

Essay about why bother with theory in ipe : Analytical essay about "Why bother with theory in IPE? The essay should deal with a brief description and critical assessment of the four major theoretical perspectives discussed in class. What are "liberal" (also related to Keynesianism", "neolibera..

User Account

All Pages