Elucidate why an increase in one firms output tends to, Ask an Expert

Economics

Suppose instead that the firms compete by setting quantities rather than prices. All other facts are the same. It is possible to rewrite the original demand equations as P1 [ 150 ( 2/ 3) Q2] ( 4/ 3) Q1 and P2 [ 150 ( 2/ 3) Q1] ( 4/ 3) Q2. In words, increases in the competitor's output lowers the intercept of the firm's demand curve.

a. Set MR1 MC to confirm that firm 1' s optimal quantity depends on Q2 according to Q1 45 .25Q2. Elucidate why an increase in one firm's output tends to deter production by the other.

b. In equilibrium, the firms set identical quantities: Q1 Q2. Find the firms' equilibrium quantities, prices, and profits.

c. Compare the firms' profits under quantity competition and price competition ( Problem 9). Provide an intuitive explanation for why price competition is more intense ( i. e., leads to lower equilibrium profits).

View complete question

Business Economics, Economics

Category:- Business Economics
Reference No.:- M9219879

Have any Question?Write your Review or question?

Related Questions in Business Economics

Standards drive instruction therefore how do standards

Standards "drive instruction," therefore, how do standards influence curriculum planning?

Explain how the application of the pdca cycle can support a

Explain how the application of the PDCA cycle can support a competitive strategy of low cost leadership.

Ford motors expects a new hybrid-engine project to produce

Ford Motors expects a new? Hybrid-engine project to produce incremental cash flows of $ 95 million each year and expects these to grow at 4?% each year. The upfront project costs are? $900 million and? Ford's weighted av ...

A five-year bond with a yield of 11 continuously compounded

A five-year bond with a yield of 11% (continuously compounded) pays an 8% coupon at the end of each year. a) What is the bond's price? b) What is the bond's duration? c) Use the duration to calculate the effect on the bo ...

Image manufacturing is an electronics manufacturer and

IMAGE Manufacturing is an electronics manufacturer and retailer. Its main products are Ultrabook computers, PCs and calculators. The current price of the Ultrabook is $ 600, the PC is $700 and the calculator is $30. This ...

According to kulish what is about the design of the euro

According to Kulish, what is about the design of the euro currency that lessens its appeal compared to prior national currencies?

How has the value of the euro changed compared to other

How has the value of the Euro changed, compared to other countries, over the past 10 years (since the Great Recession began)?

In lecture we discussed why the production possibilities

In lecture we discussed why the production possibilities frontier (the boundary of the production possibilities set) is bowed 'outwards'. When might the production possibilities set be bowed 'inwards'? Give an example of ...

In 2013 gallup conducted a poll and found a 95 confidence

In 2013, Gallup conducted a poll and found a 95% confidence interval of the proportion of Americans who believe it is the government's responsibility for health care. Give the statistical interpretation. I do not underst ...

The standard deviation of the number of video game as

The standard deviation of the number of video game A's outcomes is 0.5479, while the standard deviation of the number of video game B's outcomes is 0.2498. Which game would you be likely to choose if you wanted players t ...

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

Recent Questions

Ask Business Economics Expert