Q1. The following diagram illustrates the reaction functions and isoprofit curve

Question

Q1. The following diagram illustrates the reaction functions and isoprofit curves for a homogeneous- product duopoly in which each firm produces at constant marginal cost a If your rival produces 50 units of output, what is your optimal level of output? b. In equilibrium, how much will each firm produce in a Cournot oligopoly? c In equilibrium, what is the output of the leader and follower in a Stackelberg oligopoly (Leader: Firm 1 vertical axis)? d. How much output would be produced if the market were monopolized? e.Suppose you and your rival agree to a collusive arrangement in which each firm produces half of the monopoly output. (1) What is your output under the collusive arrangement? (2) What is your optimal output if you believe your rival will live up to the agreement? 275 250 175 150 125 100 75 50 0 2 50 75 100 125 150 175 200 225250 275 300

Explanation / Answer

Can answer only four parts according to chegg policy. Please send other parts as separate question

a. 200 given by my reaction curve at 50 of rival

B 100 each at intersection of reaction curve

C 175. Have used your notation F1 and F2. Tangency point

D 175 only

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