Economics assignment Example | Topics and Well Written Essays - 1500 words - 1

Economics - Assignment Example6 & 7 of Shy or the notes).Prices clear and standard supplied increases. The economic welfare is better than in the cournot conditions. Although profits fall, consumer surplus increases and equilibrium approaches the competitive case.2) nowadays lets find out if the above results you derived are actually true Use the StackelbergSolver large and enter the data with marginal cost = 4, a = 1,000 and b = -2 and derive the Stackelberg results. Of course you are overly going to hold to use the CournotSolver. Why? Explain your results. Do your results conform to the theory you provided above in problem 1? Display your results.In the Bertrand model, the fast(a)s set prices simultaneously instead of quantity. The model is only effectual in an oligopolistic, market structure where there are few unwaverings selling too many buyers. As matter of fact, its easier and cheaper to adjust prices than quantity. However, the process of priced cuts can be risky.Equ ilibrium price and quantity in a Bertrand model is the competitive equilibrium. Note that the firms can either set price or quantity but not both. In the Bertrand model the firms set price simultaneously.Consider a 2-firm case, suppose firm 1 moves first and sets price p MC, in an effort to maximize profit. Firm 2 will have an incentive to lower the price such that p1p2MC, to capture a larger market share. Rationally, consumers will qualify to the lower price, p2 and firm 1 will make zero profits. The assumption is that, consumers are well sensible and the products are homogeneous.Firm 1will thus cut its price making it lower than P2. The game continues until both firms vote down a price equal to MC, and make zero economic profits. At this price no firm would either raise prices leads to zero sales, or lower prices at p 5) a) Below is a turn off showing the payoffs for price strategies that each of 2 firms can make. These profits are derived from the