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The inverse market demand curve for American alligators is P = 4,000 - 2Q, where Q is the quantity of alligators and P is the market price. American alligators can be produced at a constant marginal cost of $1,000, and all American alligators are identical. The inverse market demand curve for American alligators is P = 4,000 - 2Q, where Q is the quantity of alligators and P is the market price. American alligators can be produced at a constant marginal cost of $1,000, and all American alligators are identical.

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a. MR = 4,000 - 4Q. Set MR = MC:
4,000 -...

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The output of firms is determined simultaneously in _____ competition but sequentially in _____ competition.


A) Cournot; Bertrand with differentiated goods
B) Stackelberg; Cournot
C) collusion; Cournot
D) Cournot; Stackelberg

E) A) and D)
F) A) and C)

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Use the following to answer question: Figure 11.6 Use the following to answer question: Figure 11.6 -(Figure 11.6) The graph depicts a monopolistically competitive firm. The firm's current economic profit is _____, and its long-run economic profit is _____. A) $6,000; $0 B) $4,000; $0 C) $2,000; $2,500 D) $4,000; $3,000 -(Figure 11.6) The graph depicts a monopolistically competitive firm. The firm's current economic profit is _____, and its long-run economic profit is _____.


A) $6,000; $0
B) $4,000; $0
C) $2,000; $2,500
D) $4,000; $3,000

E) A) and D)
F) None of the above

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In the Cournot model, under the assumption that all firms operating in the industry have the same cost structure, we can write firm i's profit-maximization problem as _____, where QiO is the combined output of all other firms in the market and In the Cournot model, under the assumption that all firms operating in the industry have the same cost structure, we can write firm i's profit-maximization problem as _____, where Q<sub>i</sub><sup>O</sup> is the combined output of all other firms in the market and is the firm i's cost function. A) ; B) ; C) ; D) is the firm i's cost function.


A) In the Cournot model, under the assumption that all firms operating in the industry have the same cost structure, we can write firm i's profit-maximization problem as _____, where Q<sub>i</sub><sup>O</sup> is the combined output of all other firms in the market and is the firm i's cost function. A) ; B) ; C) ; D)
; In the Cournot model, under the assumption that all firms operating in the industry have the same cost structure, we can write firm i's profit-maximization problem as _____, where Q<sub>i</sub><sup>O</sup> is the combined output of all other firms in the market and is the firm i's cost function. A) ; B) ; C) ; D)
B) In the Cournot model, under the assumption that all firms operating in the industry have the same cost structure, we can write firm i's profit-maximization problem as _____, where Q<sub>i</sub><sup>O</sup> is the combined output of all other firms in the market and is the firm i's cost function. A) ; B) ; C) ; D)
; In the Cournot model, under the assumption that all firms operating in the industry have the same cost structure, we can write firm i's profit-maximization problem as _____, where Q<sub>i</sub><sup>O</sup> is the combined output of all other firms in the market and is the firm i's cost function. A) ; B) ; C) ; D)
C) In the Cournot model, under the assumption that all firms operating in the industry have the same cost structure, we can write firm i's profit-maximization problem as _____, where Q<sub>i</sub><sup>O</sup> is the combined output of all other firms in the market and is the firm i's cost function. A) ; B) ; C) ; D)
; In the Cournot model, under the assumption that all firms operating in the industry have the same cost structure, we can write firm i's profit-maximization problem as _____, where Q<sub>i</sub><sup>O</sup> is the combined output of all other firms in the market and is the firm i's cost function. A) ; B) ; C) ; D)
D) In the Cournot model, under the assumption that all firms operating in the industry have the same cost structure, we can write firm i's profit-maximization problem as _____, where Q<sub>i</sub><sup>O</sup> is the combined output of all other firms in the market and is the firm i's cost function. A) ; B) ; C) ; D) In the Cournot model, under the assumption that all firms operating in the industry have the same cost structure, we can write firm i's profit-maximization problem as _____, where Q<sub>i</sub><sup>O</sup> is the combined output of all other firms in the market and is the firm i's cost function. A) ; B) ; C) ; D)

E) All of the above
F) B) and C)

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The market inverse demand curve is P = 60 - Q. The three firms in this industry are acting like a monopolist, evenly splitting output. The marginal cost is $6. Suppose one of the firms produces an additional unit of output. The cheating firm's profit will change from:


A) $50 to $40.
B) $34 to $67.
C) $230 to $252.
D) $243 to $260.

E) None of the above
F) A) and B)

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Which of the following statements is TRUE regarding collusion, Bertrand (identical products) , and Cournot competition? Which of the following statements is TRUE regarding collusion, Bertrand (identical products) , and Cournot competition? A) I and II B) III C) I D) II


A) I and II
B) III
C) I
D) II

E) None of the above
F) B) and D)

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A two-firm cartel that produces at a constant marginal cost of $20 faces a market inverse demand curve of P = 100 - 0.50Q. Initially, both firms agree to act like a monopolist, each producing 40 units of output. If one of the firms cheats on the agreement (assuming the other firm is compliant and continues to produce at 40 units) , how much output should the cheating firm produce to maximize profits?


A) 41 units
B) 60 units
C) 80 units
D) 44 units

E) A) and D)
F) B) and D)

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Two portrait painters compete in a Bertrand market structure with differentiated products. The demand curve for the first is given by Two portrait painters compete in a Bertrand market structure with differentiated products. The demand curve for the first is given by where p<sub>F</sub> is the price for a portrait from the first and p<sub>S</sub> is the price from the second. The demand curve for the second painter's portraits is given by The two painters' cost functions are C<sub>F</sub> = q<sub>F</sub> and C<sub>S</sub> = q<sub>S</sub> respectively. Use calculus for the following: a. Identify the first painter's profit function and its reaction function. b. Identify the second painter's profit function and its reaction function. c. Identify the equilibrium prices charged for portraits by the two painter. where pF is the price for a portrait from the first and pS is the price from the second. The demand curve for the second painter's portraits is given by Two portrait painters compete in a Bertrand market structure with differentiated products. The demand curve for the first is given by where p<sub>F</sub> is the price for a portrait from the first and p<sub>S</sub> is the price from the second. The demand curve for the second painter's portraits is given by The two painters' cost functions are C<sub>F</sub> = q<sub>F</sub> and C<sub>S</sub> = q<sub>S</sub> respectively. Use calculus for the following: a. Identify the first painter's profit function and its reaction function. b. Identify the second painter's profit function and its reaction function. c. Identify the equilibrium prices charged for portraits by the two painter. The two painters' cost functions are CF = qF and CS = qS respectively. Use calculus for the following: a. Identify the first painter's profit function and its reaction function. b. Identify the second painter's profit function and its reaction function. c. Identify the equilibrium prices charged for portraits by the two painter.

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a. The first's profit is blured image The profit-max...

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The inverse demand for designer blankets is given by P = 40 - 0.01Q, where P is the price per blanket and Q is the total number of blankets brought to market. Two shops in the local market supply specialty blankets. Shop 1's cost function is given by C1 = 0.02q12, where q1 is the number it brings to market. Shop 2's cost function is given by C2 = 0.02q22, where q2 is the number it brings to market. Given that the two shops compete by setting output (Cournot): a. write shop 1's profit function. Let Q = q1 + q2. b. write shop 2's profit function.

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a. Firm 1's profit function is...

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Use the following to answer question: Figure 11.7 Use the following to answer question: Figure 11.7 -(Figure 11.7) The graph shows the market demand curve. What are the equilibrium price and market output under the following market structures? a. a two-firm cartel b. Bertrand competition with identical goods c. Cournot duopoly with identical goods -(Figure 11.7) The graph shows the market demand curve. What are the equilibrium price and market output under the following market structures? a. a two-firm cartel b. Bertrand competition with identical goods c. Cournot duopoly with identical goods

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a. A two-firm cartel produces where MR =...

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Suppose two colas compete in a Bertrand market structure with differentiated products. Demand for the first cola is given by Suppose two colas compete in a Bertrand market structure with differentiated products. Demand for the first cola is given by where p<sub>1</sub> is price for cola 1 and p<sub>2</sub> is the price for cola 2. Demand for the second cola is The costs of providing the colas are C<sub>1</sub> = q<sub>1</sub> and C<sub>2</sub> = q<sub>2</sub> respectively. a. Identify firm 1's profit function. b. Identify firm 2's profit function. c. Identify firm 1's reaction function. d. Identify firm 2's reaction function. e. Identify the equilibrium price charged for each cola. where p1 is price for cola 1 and p2 is the price for cola 2. Demand for the second cola is Suppose two colas compete in a Bertrand market structure with differentiated products. Demand for the first cola is given by where p<sub>1</sub> is price for cola 1 and p<sub>2</sub> is the price for cola 2. Demand for the second cola is The costs of providing the colas are C<sub>1</sub> = q<sub>1</sub> and C<sub>2</sub> = q<sub>2</sub> respectively. a. Identify firm 1's profit function. b. Identify firm 2's profit function. c. Identify firm 1's reaction function. d. Identify firm 2's reaction function. e. Identify the equilibrium price charged for each cola. The costs of providing the colas are C1 = q1 and C2 = q2 respectively. a. Identify firm 1's profit function. b. Identify firm 2's profit function. c. Identify firm 1's reaction function. d. Identify firm 2's reaction function. e. Identify the equilibrium price charged for each cola.

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a. Firm 1's profit is blured image b. Firm 2's profi...

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In a Cournot market structure with two firms, firm A's first-order condition can be expressed as:


A) In a Cournot market structure with two firms, firm A's first-order condition can be expressed as: A) ) B) ) C) ) D) )
)
B) In a Cournot market structure with two firms, firm A's first-order condition can be expressed as: A) ) B) ) C) ) D) )
)
C) In a Cournot market structure with two firms, firm A's first-order condition can be expressed as: A) ) B) ) C) ) D) )
)
D) In a Cournot market structure with two firms, firm A's first-order condition can be expressed as: A) ) B) ) C) ) D) )
)

E) A) and B)
F) B) and C)

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The market inverse demand curve for thrust bearings is P = 15 - 1.5Q, where Q is measured in hundreds of bearings per day and P is the price per bearing. The marginal cost is $3. The market inverse demand curve for thrust bearings is P = 15 - 1.5Q, where Q is measured in hundreds of bearings per day and P is the price per bearing. The marginal cost is $3.

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a. Each firm will set price equal to mar...

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Two companies are the only snowplow merchants in a small town. Inverse market demand curve is P = 100 - 10Q, where Q = q1 + q2. (Firm 1's output = q1; Firm 2's output = q2.) Each firm has marginal costs of $25. What is the Nash equilibrium in this market?

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To find the Nash equilibrium, first find...

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Suppose that two firms are competing on price. The firms produce identical goods, and the marginal cost of each firm is constant at $15. If one firm is charging a price of $18, the other firm should:


A) raise its price to $18.01.
B) charge $17.99.
C) also charge $18.
D) cut its output to raise the market price well above $18.

E) All of the above
F) C) and D)

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The Nash equilibrium in Bertrand competition with identical goods:


A) occurs when each firm produces where marginal revenue equals marginal cost.
B) occurs when each firm sets price equal to marginal cost.
C) occurs when each firm sets price equal to average total cost.
D) does not exist.

E) A) and C)
F) B) and C)

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Gotcha, the only seller of stun guns, faces the inverse market demand curve P = 400 - 12Q, where Q measures the number of stun guns per day and P is the price per stun gun. The marginal cost is constant at $64. Gotcha, the only seller of stun guns, faces the inverse market demand curve P = 400 - 12Q, where Q measures the number of stun guns per day and P is the price per stun gun. The marginal cost is constant at $64.

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a. Set MR = MC:
400 - 24Q = 64
Q = 14
P ...

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The market inverse demand curve is P = 90 - Q, where Q is the total market output consisting of Firm 1's output, q1, and Firm 2's output, q2. Both firms have a constant marginal cost of $10. If Firm 1 selects its output level first, how much output does each firm produce?


A) q1 = 40; q2 = 20
B) q1 = 30; q2 = 15
C) q1 = 18; q2 = 18
D) q1 = 14; q2 = 21

E) A) and C)
F) C) and D)

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Suppose that two manufacturers produce identical fireproof safes at a constant marginal cost of $90. The market inverse demand curve for fireproof safes is P = 450 - 2Q, where Q is the total output of fireproof safes produced by the two manufacturers, q1 + q2. The firms compete by simultaneously choosing their quantity to produce. At Nash equilibrium, what is the market price of a fireproof safe?


A) $340
B) $210
C) $160
D) $130

E) B) and D)
F) B) and C)

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Two firms are producing identical goods in a market characterized by the inverse demand curve P = 60 - 2Q, where Q is the sum of Firm 1's and Firm 2's output, q1 + q2. Each firm's marginal cost is constant at $12, and fixed costs are zero. Answer the following questions, assuming that the firms are Cournot competitors. Two firms are producing identical goods in a market characterized by the inverse demand curve P = 60 - 2Q, where Q is the sum of Firm 1's and Firm 2's output, q<sub>1</sub> + q<sub>2</sub>. Each firm's marginal cost is constant at $12, and fixed costs are zero. Answer the following questions, assuming that the firms are Cournot competitors.

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a. For Firm 1, P = 60 - 2(q1 +q2) = 60 - 2...

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