Cournot equilibrium

Assume that Smith Inc. and Wang, Inc. compete in an oligopolistic setting. They produce a homogeneous product and face the following industry demand curve: P = 20 - .01Q Where Q = Q1 + Q2 a. Each firm faces a marginal cost of $10. Find the equilibrium quantity produced by each firm in the Cournot equilibrium. What is the equilibrium price and profits for each firm? b. What are the equilibrium price, combined output, and profits with Bertrand competition?

Nash Equilibrium - Suppose you are one of two producers of tennis balls. Both you and your competitor have zero marginal costs. Total demand for tennis balls is ...

Suppose you are one of two producers of tennis balls. Both you and your competitor have zero marginal costs. Total demand for tennis balls is P = 60 – Q Where Q = the sum of the outputs of you and your competitor. a. Suppose you are in this situation only once. You and your competitor have to announce your individual outputs at the same time. You expect your competitor to choose the Nash equilibrium strategy. How much will you choose to produce and what is your expected profit? b. Now suppose that you have to announce your output before your competitor does. How much will you choose to produce? What is your expected profit? Is it an advantage or a disadvantage to move first? Exp... click for more

Short Run Marginal Cost - The short-run marginal cost of the Ohio Bag Company is 2Q. Price is $100. The company operates in a competitive industry. Currently, the company is producing 40 units per period. What is the optimal short-run output? Calculate the profits that Ohio Bag is losing through suboptimal output.

The short-run marginal cost of the Ohio Bag Company is 2Q. Price is $100. The company operates in a competitive industry. Currently, the company is producing 40 units per period. What is the optimal short-run output? Calculate the profits that Ohio Bag is losing through suboptimal output.

Econometrics

Recall from introductory economics that an increase of $1 in government spending may increase GDP by more than $1. The exact amount by which GDP goes up is the multiplier. Using a sample of 41 observations, we estimate the multiplier; its estimated value is 4.0 and its standard error is .4. a) Find a 90 percent confidence interval, a 95 percent confidence interval, and a percent confidence interval for the true value of the multiplier. b) Would you believe that the value of the multiplier was 4.2? Would you believe that it was 2.8? c) If government spending increases bt $20 billion, how much do you predict that GDP will rise? Find an interval in which it is 90 percent likely that th... click for more

Econometrics

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