Exam 26: A: Oligopoly

In Problem 4, suppose that the market demand curve for bean sprouts is given by P = 1,660 - 4Q, where P is the price and Q is total industry output. Suppose that the industry has two firms, a Stackleberg leader and a follower. Each firm has a constant marginal cost of $60 per unit of output. In equilibrium, total output by the two firms will be

In Problem 6, suppose that two Cournot duopolists serve the Peoria-Dubuque route, and the demand curve for tickets per day is Q = 240 - 2p (so p = 120 - ). Total costs of running a flight on this route are 900 + 30q, where q is the number of passengers on the flight. Each flight has a capacity of 80 passengers. In Cournot equilibrium, each duopolist will run one flight per day and will make a daily profit of

In Problem 5, suppose that Grinch and Grubb go into the wine business in a small country where wine is difficult to grow. The demand for wine is given by p = $480 - .2Q, where p is the price and Q is the total quantity sold. The industry consists of just the two Cournot duopolists, Grinch and Grubb. Imports are prohibited. Grinch has constant marginal costs of $6 and Grubb has marginal costs of $45. How much Grinch's output in equilibrium?

There are two firms in the blastopheme industry. The demand curve for blastophemes is given by p = 6,600 - 5q. Each firm has one manufacturing plant and each firm i has a cost function C(q_i) = q²_i, where q_i is the output of firm i. The two firms form a cartel and arrange to split total industry profits equally. Under this cartel arrangement, they will maximize joint profits if

If in Problem 4, the inverse demand for bean sprouts were given by P(Y) = 640 - 3Y and the total cost of producing Y units for any firm were TC(Y) = 10Y and if the industry consisted of two Cournot duopolists, then in equilibrium each firm's production would be

In Problem 5, suppose that Grinch and Grubb go into the wine business in a small country where wine is difficult to grow. The demand for wine is given by p = $480 - .2Q, where p is the price and Q is the total quantity sold. The industry consists of just the two Cournot duopolists, Grinch and Grubb. Imports are prohibited. Grinch has constant marginal costs of $30 and Grubb has marginal costs of $45. How much Grinch's output in equilibrium?

Suppose that the duopolists Carl and Simon in Problem 1 face a demand function for pumpkins of Q = 8,400 - 800P, where Q is the total number of pumpkins that reach the market and P is the price of pumpkins. Suppose further that each farmer has a constant marginal cost of $.50 for each pumpkin produced. If Carl believes that Simon is going to produce Q_s pumpkins this year, then the reaction function tells us how many pumpkins Carl should produce in order to maximize his profits. Carl's reaction function is R_C(Q_s) =

There are two firms in the blastopheme industry. The demand curve for blastophemes is given by p = 4,500 - 4q. Each firm has one manufacturing plant and each firm i has a cost function C(q_i) = q²_i, where q_i is the output of firm i. The two firms form a cartel and arrange to split total industry profits equally. Under this cartel arrangement, they will maximize joint profits if

In Problem 4, suppose that the market demand curve for bean sprouts is given by P = 1,680 - 2Q, where P is the price and Q is total industry output. Suppose that the industry has two firms, a Stackleberg leader and a follower. Each firm has a constant marginal cost of $80 per unit of output. In equilibrium, total output by the two firms will be

In Problem 6, suppose that two Cournot duopolists serve the Peoria-Dubuque route, and the demand curve for tickets per day is Q = 160 - 2p (so p = 80 - ). Total costs of running a flight on this route are 400 + 20q, where q is the number of passengers on the flight. Each flight has a capacity of 80 passengers. In Cournot equilibrium, each duopolist will run one flight per day and will make a daily profit of