ECON 106P Lecture Notes - Lecture 1: Jeu De Paume, Fuel Dispenser, Agoo

73 views4 pages

whitetermite575

25 Oct 2018

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

Cd d a bq a zna a b za o d a tq a solution step step step fewfirms. 1 eachfirmhassome degreeofamarketparer b a firmcansignificantlyinfluence pre ofgodit sells u strategicbehavior firms look at potential responseofother inchoosingbestcourseofaction. Cannotmodel assumptions c faithfirmtakestheotherfirm"soutputas agiven inchoosingits bestoutput choosingoutputis vimpt us inthesritsdifficultto output eghotel gasstationnormspump. Ty pmeld a agoo a auyo d t a1600 of qq theotherfirm"sclishere wadependson cartel data 160nequ o ceo c theirquantity. Q t ch a fo icso ta or 40 ked. Compare a outcome to a firmscolludedoutas monopoly andsplit 5450 explain why artie is not stable continue. Marketoutput da n q deen af as a a cfs approachesperf pperfatbonpett f mc f a bac a. I ddz. co do dd whatf did ie clofothrfrm unitstateandthey respond if i poutputby1 they4also. The1600 di ckoi 4 area cl as constant data la al da a 0 conjectural vanalinc.

Related Questions

Consider the following market game: An incumbent firm, called firm 3, is already in an industry. Two potential entrants, called firms 1 and 2, can each enter the industry by paying the entry cost of 10. First, firm 1 decides whether to enter or not. Then, after observing firm 1's choice, firm 2 decides whether to enter or not. Then, after observing firm 1's choice, firm 2 decides whether to enter or not. Every firm, including firm 3, observes the choices of firms 1 and 2. After this, all of the firms in the industry (including firm 3) compete in a Cournot oligopoly, where they simultaneously and independently select quantities. The price is determined by the inverse demand curve p = 12 â Q, where Q is the total quantity produced in the industry. Assume that the firms produce at no cost in this Cournot game. Thus, if firm i is in the industry and produces qi, then it earns a gross profit of (12 â Q)qi in the Cournot phase. (Remember that firms 1 and 2 have to pay the fixed cost of 10 to enter).

(a) Compute the subgame perfect equilibrium of this market game. Do so by first finding the equilibrium quantities and profit in the Cournot subgames. Show your answer by designating optimal action on the tree and writing the complete subgame perfect equilibrium strategy profile. [Hint: In an n-firm Cournot oligopoly with demand p = 12 â Q and 0 costs, the Nash equilibrium entails each firm producing the quantity q = 12/(n + 1).]

(b) In the subgame perfect equilibrium, which firms (if any) enter the industry?

silverantelope83

a) What is the Fixed Cost of production (recall that it does not vary with output)

b) Calculate and graph (on the next page) Average Variable Cost, Average Fixed Cost, Average

Total Cost, and Marginal Cost.

Q VC TC

10 500 3000

20 800 3300

30 1350 3850

40 2300 4800

50 3750 6250

60 6000 8500

70 9450 11950

c) Explain why Average Variable Cost and Marginal Cost can fall initially,

but eventually rise.

d) If Fixed costs were to fall, how will that affect AFC, AVC, ATC, and

MC? Explain the intuition.

e) Explain the difference between the short-run and the long-run. How

does this concept relate to the data presented here?

f) Given a price of $145, how much of Good X will the perfectly competitive firm produce? How

much profit will the firm earn?

g) In the long run, if the market for X was made up of firms with the same cost structure,

what do you roughly expect the Perfect Competition market clearing price and per-firm

quantity to be? How much profit will they earn?

h) Given the following demand schedule, how much X would a monopoly produce, given the cost

table above? What price will they charge? How much profit will the firm earn?

Monopoly Demand:

P Q

$300 0

$270 10

$240 20

$210 30

$180 40

$150 50

$120 60

$90 70

37.Use the following setup for the next question.

A manufacturing firm is deciding whether or not to invest in a new printer that needs an initial investment of $150,000. The investment would increase cash flows in the first year by $80,000 and in the second year by $75,000.

?If the interest rate is 10% then the net present value of the investment is

?a. $5,000

b. ?- $9,091

?c. -$15,290

?-$21,901

33.

Table 13-16
Listed in the table are the long-run total costs for three different firms.

Quantity	1	2	3	4	5
Firm A	100	100	100	100	100
Firm B	100	200	300	400	500
Firm C	100	300	600	1,000	1,500

Refer to Table 13-16. Which firm is experiencing constant returns to scale?

a.	Firm C only

b. Firm A only

c.	Firm B only

Firm A and Firm B only

27.

Table 13-7
The Flying Elvis Copter Rides

Quantity	Total Cost	Fixed Cost	Variable Cost	Marginal Cost	Average Fixed Cost	Average Variable Cost	Average Total Cost
0	$50	$50	$0	--	--	--	--
1	$150	A	B	C	D	E	F
2	G	H	I	$120	J	K	L
3	M	N	O	P	Q	$120	R

Refer to Table 13-7. What is the value of E?

ECON 106P Lecture Notes - Lecture 1: Jeu De Paume, Fuel Dispenser, Agoo

Document Summary

Get access

Related Documents

ECON 106P Lecture 7: Econ 106P Lecture Notes 4.1

ECON 323 Midterm: ECON 323 TAMU Exam3Fall 15m

Economics 2150A/B Lecture Notes - Lecture 14: Storebrand, Oligopoly, Best Response

Related Questions