Will the two firms have the incentive to raise prices

Reference no: EM13219299

Consider a duopoly case that firm 1 and firm 2 are producing homogeneous products:

(a) Suppose that the two firms compete in output and set their output levels simultaneously. Given that firm 1's reaction curve is Q1 = 150 - 2Q2 and firm 2's reaction curve is Q2 = 150 - 2Q1, what are the two firms' output levels in equilibrium?

(b) Suppose that the two firms compete in output but firm 1 can take the lead in setting its output level, will firm 1expect higher or lower profits compared to its profit in part (a)? Will firm 2 expect higher or lower profit compared to its profit in part (a)?

(c) Suppose that the two firms compete in price and have identical marginal costs, what will be their prices in equilibrium? Will the two firms have the incentive to raise prices to the level that maximizes joint profits?

Reference no: EM13219299

Questions Cloud

Economic regions : which of the following statements about economic regions in the U.S is true?

Explain defined benefit pension plan : What are the key differences between a company sponsored defined contribution pension plan (DC plan) and a defined benefit pension plan (DB plan) from both the company and employee point of view.

List the main aspects of countrys culture : Identify the country. List the main aspects of countrys culture, as you perceive it today and what assumptions do you have about this country and why? What sources of information shape your assumptions?

Determine potential impact of socioeconomic status : Determine the potential impact of socioeconomic status on education in the following areas: teacher expectations, student tracking, equal representation in the curriculum, and financial support for schools.

Will the two firms have the incentive to raise prices : Suppose that the two firms compete in output and set their output levels simultaneously. Given that firm 1's reaction curve is Q1 = 150 - 2Q2 and firm 2's reaction curve is Q2 = 150 - 2Q1, what are the two firms' output levels in equilibrium.

Case study-the i.g.a. grocery store : At a family gathering, Dan Kessler, the manager of an I.G.A. grocery store , got into a conversation with his cousin, who supervised a large number of data-entry workers at a public utility company. Kessler's cousin mentioned that his company rec..

Estimate the diffusivity of a spherically shaped protein : Estimate the diffusivity of a spherically shaped protein with a MW of 36,000 in water at 37oC.

State the conditions for market equilibriumeral : exchange economy with two goods x,y. Person A has 16 units of x and no y; B has 4 x and 40 y, Ua(x,y)= x(^1/3)Y(^1/9) Ub(X,Y)= X^(2/3)Y(^1/9) 1) the demands for goods x and y for both persons. 2)state the conditions for market equilibriumeral.

Topic of physicians acceptance : Please find an article published in the last three years on the same topic or the topic of physician's acceptance of advertising in today's environment.

User Account

All Pages