Market characterized by the inverse demand curve

Assignment Help Business Economics

Reference no: EM131004671

There are two firms that are producing identical goods in a market characterized by the inverse demand curve P:60 -2Q, where Q is the sum of Firm l's and Firm 2's output, qft qz. Each firm's marginal cost is constant at$12, and fixed costs are zero. Answer the following questions, assuming that the firms are Cournot competitors.

a. Calculate each firm's reaction function.

b. How much output does each firm produce?

c. What is the market price?

d. How much profit does each firm earn?

Reference no: EM131004671

Questions Cloud

Culinary school tuition immediately after high school : You spend $5000 on one year of culinary school tuition immediately after high school. The tuition is not refundable. After 3 months you want to go to college rather than continue culinary school. An economist would tell you that the cost of your cook..

The economic profits that result from monopoly pricing : Drexoogle has developed the first computer (the “earpod”) that fits in one’s ear and functions as a phone, can tell you the time, and will conduct Google searches all in response to a person’s voice commands. What is the price and quantity that maxim..

Consider the market for vegan soup : Consider the market for vegan soup, where two firms, Kibble and Flesh Not, are in Stackelberg competition. Flesh Not observes Kibble's output level before choosing its desired output level. The market inverse demand curve for vegan soup is P: 18 - Q,..

Technology transfer in the solow model : Technology transfer in the Solow model: One explanation for China’s rapid economic growth during the past several decades is its expansion of policies that encourage “technology transfer.” Draw a graph showing what happens to output in China over tim..

Market characterized by the inverse demand curve : There are two firms that are producing identical goods in a market characterized by the inverse demand curve P:60 -2Q, where Q is the sum of Firm l's and Firm 2's output, qft qz. Each firm's marginal cost is constant at$12, and fixed costs are zero. ..

Savings and investment in the open economy : Now assume that the economy is open and that the world interest rate is determined on the world market instead of in the domestic economy. Use a two-country model with initial current accounts equal to zero. How does an increase in domestic wealth af..

Two firms conspire to charge a monopoly price : Ney Inc. and ARN Parts are the only two producers of bulldozer bucket teeth. The owners of the two firms conspire to charge a monopoly price, with each firm serving half the market. What is each firm's profit? Now suppose that Ney Inc. reneges on th..

Decrease in price of? gasoline-holding other thing? constant : Gasoline prices in the United States decreased significantly between 2008 and 2009. A decrease in the price of? gasoline, holding other things? constant, will cause which of the following to? occur?

Practical significance of income elasticity coefficients : What is the practical significance of income elasticity coefficients? Explain the significance using as examples an income elasticity of 3.0 for automobiles and an income elasticity of 0.20 for home-cooked meals.

User Account

All Pages