Question

Inswer all questions from this section.
2x20 = 40
• (a) Elucidate price and output determination under Cournot and Stackelberg models of Oligopoly.
(b) Consider a market for energy drinks consisting of only one firm. The firm has a linear cost function:
C(q) = 49, where q represents quantity produced by the firm. The market inverse demand function is
given by P(Q) = 24 29, where Q represents total industry output. Based on the given information
answer the following:
(1) What price will the firm charge? What quantity of energy drinks will the firm sell?
(ii) Now suppose a second firm enters the market. The second firm has an identical cost function. What
will be the Cournot equilibrium output for each firm?
(iii) What is the Stackelberg equilibrium output for each firm if firm 2 enters second?
(iv) How much profit will each firm make in the Cournot game? How much in Stackelberg?
(v) Which type of market do consumers prefer: monopoly, Cournot duopoly or Stackelberg duopoly?
Why?​

Answer 1

In first line you have written Inswer all questions from this section so, I want to tell you that its answer not Inswer