Intermediate Microeconomics · free preview
Cournot Quantity Competition
Simultaneous quantity setters choose best responses to each other, the Nash equilibrium at the crossing where each firm supplies 29.3 in the worked market, total 58.7 priced 41.3, between monopoly 44 and competition 88, converging to competitive as firms multiply.
1. The best-response logic
The best-response logic
2. Positioning the outcome
Positioning the outcome
3. Comparing institutions
Comparing institutions
4. Reading the diagram
Reading the diagram
5. The best response
In the Cournot duopoly with P equal 100 minus Q and MC 12, what is firm 1's best response?
6. The equilibrium
What are the symmetric Cournot quantities and the price?
7. The convergence formula
With n symmetric Cournot firms, total output approaches what as n grows?
8. The strategic externality
Why does the duopoly produce more than the monopoly?
9. Duopoly profit
Compute each firm's Cournot profit, price 41.3 minus MC 12 times quantity 29.3, and write it to the nearest whole number.
10. Ten-firm output
Compute n over n plus 1 times 88 at n of 10, and write the number.
11. Rival output and my response
If firm 2 raises its quantity from 20 to 30, what happens to firm 1's best response?
12. The residual demand view
When firm 1 takes q2 of 29.3 as given, on what demand curve does it optimize?
13. Merger to monopoly
If the two Cournot rivals merge into one firm with the same marginal cost 12, what total do they choose?
14. Reading concentration
With symmetric Cournot firms in this market, what is the per-firm markup over marginal cost?
15. Response against 30
Compute firm 1's best response to q2 of 30, half of 88 minus 30, and write the number.
16. Five-firm output
Compute total output with five symmetric Cournot firms, five sixths of 88, and write the number to two decimals.
Practice this interactively
Free account · instant grading · spaced review that schedules itself.
Start this course for free