Question 1 Suppose a firm's demand function is given as Q = 100 – 4P, where is the total market quantity and P is the market price. The fixed costs of the firm are 15 and their marginal cost is 10. (Note: The firm's total costs include the fixed cost along with marginal costs) - Determine the equilibrium price p", quantity o*, and profit of this monopolist - What profit-maximizing condition must a monopolist follow? Question 2 Consider a duopoly composed of two firms (Firm 1 and Firm 2) where the firms are setting their output quantities simultaneously. These two firms face the same cost situation C = 109, where i = {1, 2}. The market demand function for this duopoly is given by Q = 200 – 2P, where Q denotes total output. - Calculate the revenue, total costs, and profit for each firm - Determine the equilibrium quantity and price in this duopoly - Plot the reaction functions for each firm on an appropriately-labeled diagram - In the generalized case of a Cournot model, what happens to the equilibrium quantity and price as the number of firms increases? Question 3 A Stackelberg duopoly market is composed of two firms (Leader and Follower). The inverse market demand function is given by P = 200 – 20. The Leader's cost function is given by C, = 109, while the Follower's cost function is given by Cp = 597 Find the Leader's revenue, quantity produced, and profit Find the Follower's revenue, quantity produced, and profit - What would be the equilibrium quantity and price in this market? Provide an example of a Stackelberg (Leader-Follower) market
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