Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Microeconomics Expert

consider a game between two firms. the timing of the game is as follows:

-firm 1 chooses to make a costly investment in capital. denote the level chosen by K. The cost of investment is r per unit of capital.
-firm 1 and firm 2 decide to make (additional) investments and then produce. each unit of output requires on unit of capital and one unit of labor. labor costs w per unit.

the market demand curve is given by: P=A-B(q1+q2)

there are no other variables costs of production outside of capital and labor. however, each firm must incur a fixed cost of F to produce any positive quantity.

1. what are the marginal costs of firm 2 in period 2?
2. what are the marginal costs of firm 1 in period 2? do they depend on k?
3. if k=0, how is the game different than a standard cournout game?
4. derive the best response function for firm 2 in period 2 assuming that firm 2 produces
5. derive the best response function for firm 1 as a function of q2 and k.
6. Draw a graph showing the best response functions for firm 1 and firm 2 in (q1,q2) space. Show the two resulting equilibrium allocations should the firms produce.
7.prepare out the profit function for firm 2 assuming that K = 0. Repeat for the case where K = ∞. Which profit is higher?
8. Work out parts a-e from the numerical ex Practice Problem 12.2 on p. 279 of the book (this is mostly just plugging in numbers into what you've derived above).
9. describe, in plain English, why the incumbent's firm choice to set K = 32 induces social welfare loss.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M945451

Have any Question? 


Related Questions in Microeconomics

Project-listen to this video asafter you work on your graph

Project- Listen to this video as/after you work on your graph. The lecture is on the 'Aftermath of the Financial Crisis' given by Ben Bernanke in March 29 th 2012. https://www.c-span.org/video/?305198-1/ben-bernanke-lect ...

Question 1the document that lists and details the contents

Question 1 The document that lists and details the contents and conditions of a shipment is called: A. The Tariff B. Proof of Delivery C. The Invoice D. The Bill of Lading Question 2 Declining transport rates as the quan ...

Intermediate microeconomics assignmentexercise 1 -

INTERMEDIATE MICROECONOMICS ASSIGNMENT Exercise 1 - Capturing surplus using a block pricing Consider a monopolist facing a linear demand p(q) = 20 - q, and marginal cost MC = 2. a) If the monopolist charges the same pric ...

Assignmentvirtually all general managers face

Assignment Virtually all general managers face capital-budgeting decisions in the course of their careers. The most common of these is the simple "yes" versus "no" choice about a capital investment. Regardless of the typ ...

Short-run economic fluctuationsplease have by 800 pm west

Short-Run Economic Fluctuations Please have by 8:00 pm west coast time cailfornia time 12/13/2016. Plagrism free, orignal work, and refs. APA format double space. please ask questions right away please dont wait to the l ...

Assignment discussion-applying balanced scorecardin many

Assignment: Discussion-Applying Balanced Scorecard In many cases, managers end up in trouble as they direct their focus exclusively on cost savings. Cost cutting is always emphasized, but other impacts, such as decreased ...

Assignmentthere is the widespread notion that economists

Assignment There is the widespread notion that economists rarely agree with each other. This seems perplexing when we note also that economics is often called the "Queen of the Social Sciences" (meaning that it is the mo ...

Problem setthis problem set is due on monday october 24th

Problem Set This problem set is due on Monday, October 24th in class. Consider the specific factors model (2 goods, 3 factors, where labor is the flexible factor) for a given small country with the following Cobb-Douglas ...

The purpose of an assignment is to ensure that the learner

The purpose of an assignment is to ensure that the Learner is able to: - Use methods of enquiry and research in a disciplined field. - Interpret and evaluate text. - Have a sound understanding of key principles and theor ...

Scenario descriptionbigjet plans to launch a weekly flight

Scenario Description Bigjet plans to launch a weekly flight on a long-haul route. It faces four sets of decisions corresponding to short-run, medium-run, long-run, and very long-run operations. Short Run: In the short ru ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen