Chap_9_Solutions_Odd

Chap_9_Solutions_Odd - Chapter 9: Answers to Questions and...

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1. a. D2. b. D1. c. i. $20. ii. 0 units. iii. $20 to $50. 2. 3. a. 125 units. b. 100 units each. c. The leader produces 150 units and the follower produces 75 units. d. 150 units. e. i. 75 units. ii. About 112.5 units. 4. 5. a. Set P = MC to get 500 – 2Q = $100. Solving yields Q = 200 units. b. P = MC = $100. c. Each firm earns zero economic profits. 6. 7. Model Output Profits Cournot Q 1 = Q 2 = 58.30 π 1 = π 2 = $6,805.56 Stackelberg Q L = 87.5; Q F = 43.75 π L = $7,656.25; π F = $3,828.13 Bertrand Market output = 175 units Zero Collusion Market output = 87.5 units Industry Profits = $15,312.50 8. 9. This would positively impact sales and the firm’s bottom line if Ford is the only company to offer such a program. However, one would expect rivals (such as GM) respond by with a similar plan. This would reduce the impact of Ford’s program on your sales and bottom line. Indeed, GM did quickly respond with its Drive America program. Managerial Economics and Business Strategy, 4e
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Chap_9_Solutions_Odd - Chapter 9: Answers to Questions and...

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