The firms have different marginal costs

Assignment Help Business Economics

Reference no: EM131002686

Consider a model of Cournot competition as studied in class, with 2 firms and a linear inverse demand function P(Q) = a – Q (where Q = q1 + q2 is the total quantity produced by the two firms and a is a parameter). The firms have different marginal costs: c1 for Firm 1 and c2 for Firm 2. (a) Find the Nash equilibrium. (b) Assume Firm 1’s marginal cost is larger (c1 > c2). Which firm produces more in equilibrium? How do the quantities produced in equilibrium change if Firm 1 improves its technology, leading to a slightly lower c1 (while c2 is unchanged)? (c) Find the total quantity produced and each firm’s profit in equilibrium. Describe what happens to these when Firm 1 changes its technology as above.

Reference no: EM131002686

Questions Cloud

Con?dence interval estimate for the population mean : Determine the 95% con?dence interval estimate for the population mean and compare it with the hypothesized mean. What does this imply about whether or not the null hypothesis H0 : μ = μ0 should be rejected at the α = 0.05 level? Determine the p-val..

At the break-even point of 2,797 units, variable costs are : At the break-even point of 2,797 units, variable costs are $126,407, and fixed costs are $78,177. The selling price per unit is

Lifetime of two different brands of car batteries : The owner of a ?eet of taxi cabs wants to determine if there is a difference in the lifetime of two different brands of car batteries used in the ?eet of cabs. State the appropriate null and alternative hypotheses.

Explain how to market with article directories : Explain how to market with article directories, e-books, and white papers. Discuss the concept of video sharing. Explain benefits of marketing with online videos.

The firms have different marginal costs : Consider a model of Cournot competition as studied in class, with 2 firms and a linear inverse demand function P(Q) = a – Q (where Q = q1 + q2 is the total quantity produced by the two firms and a is a parameter). The firms have different marginal co..

Average remaining service life of active employees : The funded status of Hilton Paneling Inc.'s defined benefit pension plan and the balances in prior service cost and the net gain-pensions, are given below.

Decision-making about the process performance : Formulate the decision-making about the process performance as a hypothesis test, stating the null and the alternative hypotheses.

Would you be more likely to find that lessees are in high or : Would you be more likely to find that lessees are in high or low income tax brackets as compared with lessor?

Suppose that your marginal federal income tax rate : Suppose that your marginal federal income tax rate is 30%, the sum of your marginal state and local tax rates is 5%, and the yield on thirty-year U.S. Treasury bonds is 10%. You would be indifferent between buying a thirty-year Treasury bond and buyi..

User Account

All Pages