Firms produce a homogeneous product

Assignment Help Business Economics

Reference no: EM13983931

Consider an industry in which n firms produce a homogeneous product. Demand for the product is given by p = a − Q, where a is a positive constant and Q is the industry output. Each producer is identical, having a constant marginal cost c. Assume a > c. (a) If this industry is perfectly competitive, what is the equilibrium price and quantity? (b) Suppose n = 1 (so, it is a monopoly market). Find the equilibrium price and quantity. (c) Suppose these n producers are engaged in Cournot competition. Find the symmetric equilibrium. (An equilibrium is symmetric if all the firms are producing the same amount.) What happens to the equilibrium price as n approaches infinity? (d) Suppose one firm is a von Stackelberg leader and all the rest are followers and engaged in Cournot competition. Find the equilibrium price and quantity. What happens to the equilibrium price as n approaches infinity?

Reference no: EM13983931

Questions Cloud

Equilibrium price-quantity-number of firms-output per firm : Consider an industry in which all firms have identical technology given by a production function: q = min K α , L 1 − α 1/2 , where q is the level of output, α is some constant between 0 and 1, and K and L are two inputs. Describe the long-run equil..

Monopsony and the minimum wage : Monopsony and the Minimum Wage. A monopsonist firm operates according to the production function: Y = L where L is labor. Workers supply labor to the firm according to the following labor supply function: L = (alpha)(w). Write down the full the profi..

Describe short-run equilibrium by giving-equilibrium price : Consider a competitive industry in which each firm has the same production technology given by the production function q = K1/3L2/3, where K and L are two inputs and q is the amount of output. The unit price of K is $0.50 and the unit price of L is $..

What does the production possibilities curve represent : What does the production possibilities curve represent? discuss the implications. what are the factors of productions? What is the difference between the current account and the capital account, what is included in each calculation? are these account..

Firms produce a homogeneous product : Consider an industry in which n firms produce a homogeneous product. Demand for the product is given by p = a − Q, where a is a positive constant and Q is the industry output. Each producer is identical, having a constant marginal cost c. Find the eq..

Performance-based payment : Performance-based payment, as incorporated in the Affordable Care Act, may encourage hospitals to increase staffing of which of the following professions

What quantity is average variable cost a minimum : A firm in a perfectly competitive industry has the following cost function: C¡= $50+ $1.80 * Q¡ - $0.048*Q¡²+ $0.004* Q¡³ A. At what quantity is average variable cost a minimum? B. How many units would the firm produce if price = $1.80

What the maximum possible consumption in period one : Consider Irving Fisher’s two-period model. If y1 = 20, 000, y2 = 15, 000, the interest rate r equals 0.50 (50 percent), What the maximum possible consumption in period one? What the maximum possible consumption in period two? if there is a binding co..

Sufficient conidtion for political freedom-hypothesis : Milton Friedman said the free markets are a necessary but not sufficient conidtion for political freedom. Which of the following events would support Milton's hypothesis?

User Account

All Pages