This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: the rest of the market share. Therefore, it is a sequential model instead of a simultaneous model like Cournot. 17. The profit of the individual firm will decrease and the number of firms in the market will also decrease because the AC exceeds the market price, which means firms are operating at a loss and the market can no longer accommodate extra firms. 30. a. Under collusive equilibrium, firm 1 will produce an output of 25 at price 95 when market output is 50. Firm 2 will produce output 20 at price 100 when market output is 40. b. Under Cournot equilibrium, Firm 1 will produce 50 units at price 70 while Firm 2 produces 40 units at price 80. Market output will be 90....
View Full Document
- Fall '10
- Microeconomics, market output, cartel members, Stackelburg Equilibrium, Marsala EC251H Sec., Woodbury Ch.13 Homework