Economics: Demand, Cost, Surplus
Determination of equilibrium price and output and consumer and producer surplus in a duopolistic industry based on Cournot and Stakelberg models and a comparison to perfect competition.
Content
Sub: Economics Question:
Topic: Micro Economics
Determination of equilibrium price and output and consumer and producer surplus in a duopolistic industry based on Cournot and Stakelberg models and a
ClassOf1 provides exert guidance for College, Graduate and High school homework and live online tutoring on subjects like Finance, Marketing, Statistics, Economics and others. Check out more solved problems in our Solution Library.
comparison to perfect competition.
Two identical firms face linear demand. Market demand is given by P=30-Q. suppose both firms face zero marginal costs. 1. Solve for Cournot equilibrium prices and outputs. 2. Solve for Stakelberg equilibrium prices and outputs. 3. Compare graphically consumer and producer surplus in Cournot and Stakelberg equilibrium to perfect competition.
Solution:
1. P= 30-Q = 30-(Q1+Q2) Where Q= Q1+Q2=industry output Q1=firm 1’s output Q2=firm 2’s output MC=0 TR1= PQ1= 30*Q1- Q1^2 –Q2*Q1 MR1=30 - 2Q1 - Q2 TR2=PQ2=30*Q2 - Q1*Q2 – Q2^2 MR2=30 – Q1 – 2Q2 If you like to download the complete solution, visit our solution library by copying to your browser the following link
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Topic: Micro Economics
Determination of equilibrium price and output and consumer and producer surplus in a duopolistic industry based on Cournot and Stakelberg models and a
ClassOf1 provides exert guidance for College, Graduate and High school homework and live online tutoring on subjects like Finance, Marketing, Statistics, Economics and others. Check out more solved problems in our Solution Library.
comparison to perfect competition.
Two identical firms face linear demand. Market demand is given by P=30-Q. suppose both firms face zero marginal costs. 1. Solve for Cournot equilibrium prices and outputs. 2. Solve for Stakelberg equilibrium prices and outputs. 3. Compare graphically consumer and producer surplus in Cournot and Stakelberg equilibrium to perfect competition.
Solution:
1. P= 30-Q = 30-(Q1+Q2) Where Q= Q1+Q2=industry output Q1=firm 1’s output Q2=firm 2’s output MC=0 TR1= PQ1= 30*Q1- Q1^2 –Q2*Q1 MR1=30 - 2Q1 - Q2 TR2=PQ2=30*Q2 - Q1*Q2 – Q2^2 MR2=30 – Q1 – 2Q2 If you like to download the complete solution, visit our solution library by copying to your browser the following link
ClassOf1 provides exert guidance for College, Graduate and High school homework and live online tutoring on subjects like Finance, Marketing, Statistics, Economics and others. Check out more solved www.classof1.com problems in our Solution Library.
*The Homework solutions from ClassOf1 are intended to help the student understand the approach to solving the problem and not for
submitting the same in lieu of your academic submissions for grades.
