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Vitek1552 [10]
3 years ago
15

We can use the Cournot model to derive an equilibrium industry structure. For this purpose, we will define an equilibrium as tha

t structure in which no firm has an incentive to leave or enter the industry. If a firm leaves the industry, it enters an alternative competitive market in which case it earns zero (economic) profit. If an additional firm enters the industry when there are already n firms in it, the new firm's profit is determined by the Cournot equilibrium with n + 1 firms. For this problem, assume that each firm has the cost function: C(q) = 256 +20_q. Assume further that market demand is described by: P = 100 - Q. a. Find the long-run equilibrium number of firms in this industry. b. What industry output, price, and firm profit levels will characterize the long-run equilibrium?
Business
1 answer:
Nina [5.8K]3 years ago
5 0

Answer:

a. long run equilibrium numbers of firms in the industry are 4

b. Output of each firm will be 16

Explanation:

Under cournot’s equilibrium, the cost function of an individual firm is written as:

C(q) = F + cq

In our case, C(q) is given as

C(q) = 256 + 20q

Therefore, F = 256 and c = 20

At the same time, the demand function is written as:

P(Q) = a - bQ

In our case, P is given as

P = 100 – Q

Therefore, a = 100, b =1

a. Long run equilibrium number of firms in the industry

N = ((a-c)/(bF)^0.5) – 1

N = ((100-20)/(1*256)^0.5) – 1

N = (80/16) – 1 = 4

Therefore, long run equilibrium numbers of firms in the industry are 4

b. Output of each firm will be q = (a-c)/b*(1+N) = (100-20)/1*(1+4) = 80/5 = 16

Therefore, total output of industry is 16*4 = 64

Price = 100-64 = 36

Profit = Revenue – Cost

Revenue of each firm = Price * Output = 36*16 = 576

Cost = 256+20*16 = 576

Therefore, profit = 0

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1. As manager of a restaurant, Josh has had to make some tough decisions. When employees question his authority, he is quick to
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d. Competence face

Explanation:

Based on the scenario being described within the question it can be said that the face need that Josh is satisfying through this is known as Competence face. This describes an individual's desire to appear intelligent, accomplished, and cable to those around him/her. Which is why Josh responds to criticism with a fair and firm tone in order to keep up appearances of being in control.

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The 2017 Form 10-K of Oracle Corporation, for the May 31, 2017 year-end, included the following information relating to their al
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3 years ago
rick's pawn shop issued 11% bonds, dated january 1, with a face amount of $400,000 on january 1, 2022. the bonds sold for $370,0
geniusboy [140]

An unrealized gain of $5,412 from the change in the fair value of the debt.

<h3>How does general interest rate risk work?</h3>

Interest-rate risk (IRR) is the exposure of a financial institution to unfavorable changes in interest rates. Accepting this risk is common practice in the banking industry and can be a key driver of profitability and shareholder value.

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Net income and OCI are both included in comprehensive income.

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10 months ago
What is the present value of $6,811 to be received in one year if the discount rate is 6.5 percent?
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The present value of of $6,811 to be received in one year if the discount rate is 6.5 percent  will be $6, 395.31.

What does Present Value mean?

A financial concept that calculates the current value of a future sum of money or stream of cash flows is present value. It's used to compare the relative worth of different amounts of money that aren't available at the same time. The inverse of future value. The sum of future investment returns discounted at a specified rate of return is calculated as the present value of money you expect from future income.

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The procedure to find an present value:

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