ECON 4180 Lecture 7: EC4180S16_L7

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sangriaplatypus369

28 Mar 2016

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The eld of industrial organization the study of market structure, rm behavior, and overall industry performance have greatly bene ted from the game theory revolution. Now let us study several topics in industrial organi- zation using the dynamic games with perfect information: stackelberg duopoly game. Suppose that the rms move sequentially rather than simultaneously. Rm 1 selects its quantity q1, and this is observed by rm 2. Then, rm 2 selects its quantity q2, and the payo s are determined so that rm i"s payo is (12 qi qj)qi. This type of game is called the stackelberg duopoly model. Note that rm 1"s strategy in this game is a single number q1. Also note that rm 2"s strategy can be expressed as a function that maps rm 1"s quantity q1 into rm 2"s quantity q2. That is, considering q1, q2 [0, 12], we can write rm 2"s strategy as a function s2 : [0, 12] [0, 12].

Related Questions

This is due today!! Thank you!!

Consider a firm with production function f(L, K)=2L+6K. Assume that capital is fixed at K=6. Then, the amount of labor necessary to produce q units is?

A		L(q,6)= q-12
B		L(q,6)= q/18-5
C		L(q,6)= q/2-18
D		L(q,6)= 3q/5-2
E		L(q,6)= q²/2-12

Consider a firm with production function f(L, K)= 4L^2/3K^1/3. Assume that capital is fixed at K=1. Assume also that the price of capital r=4 and the price of labor w=2. Then, the average cost of producing q units is?

A		AC(q)= 4/q+q^1/2/4.
B		AC(q)= 2/q+1/4q^1/3.
C		AC(q)= 2/3q+1/q^1/3.
D		AC(q)= 1/3q+q^1/2.
E		AC(q)=8/q+2q^1/2.

Consider a firm with production function f(L, K)=3L^1/3K^2/3. Assume that capital is fixed at K=1. Assume also that the price of capital r=5 and the price of labor w=3. Then, the cost of producing q units is?

A		C(q)=3+q²/9.
B		C(q)=10+q³.
C		C(q)=5+q³/9.
D		C(q)=2/3+q²/3.
E		C(q)=1/3+q³/3.

peardinosaur914

All of the following have a few things in common that we discussed in class. After answering them write a summary of what those things are?

1. Consider a firm with production function f(L, K)=3L^1/3K^2/3. Assume that capital is fixed at K=1. Assume also that the price of capital r=5 and the price of labor w=3. Then, the cost of producing q units is?

A.		C(q)=3+q²/9.
B.		C(q)=10+q³.
C.		C(q)=5+q³/9.
D.		C(q)=2/3+q²/3.
E.		C(q)=1/3+q³/3.

2. Consider a firm with production function f(L, K)= 4L^2/3K^1/3. Assume that capital is fixed at K=1. Assume also that the price of capital r=4 and the price of labor w=2. Then, the average cost of producing q units is?

	A.	AC(q)= 4/q+q^1/2/4.
	B.	AC(q)= 2/q+1/4q^1/3.
	C.	AC(q)= 2/3q+1/q^1/3.
	D.	AC(q)= 1/3q+q^1/2.
	E.	AC(q)=8/q+2q^1/2.

Consider a firm with production function f(L, K)= 4L^2/3K^1/3. Assume that capital is fixed at K=1. Assume also that the price of capital r=4 and the price of labor w=2. Then, the marginal cost of producing q units is?

A.		MC(q)= 3q^1/2/8.
B.		MC(q)= 2/3q^1/3.
C.		MC(q)=3/2q^1/2.
D.		MC(q)=3q^1/2.
E.		MC(q)=1/6q^1/3.

salmongoldfish379

Suppose that a monopolist sells a product to consumers with an aggregate inverse demand that is downward sloping in quantity, P(Q) = 1, 000 â 4Q. The total cost of producing Q units is C(Q) = Q2 .

a) What is the unregulated price-quantity pair?

b) At this equilibrium, what are CS, PS, and W?

c) What price ceiling or floor maximizes W?

d) What are CS, PS and W at this equilibrium?

bronzefly794

ECON 4180 Lecture 7: EC4180S16_L7

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