Purchase Solution

Cournot Duopoly and Pricing Strategy

Not what you're looking for?

Ask Custom Question

1. Suppose that in a perfectly competitive industry the equilibrium industry quantity is 10,000 units. Suppose that the monopoly output is 5,000. For a 2-firm Cournot Oligopoly (N =2) known as a duopoly, what is a likely Cournot QUANTITY for the industry?
a. 3, 000 units
b. 5,000 units
c. 6,667 units
d. 10,000 units
e. 15,000 units

2. A manufacturer produces two types of computer software, Word processing (W) and Spreadsheet (S), which is offered to two different retail outlets (#1 and #2). The following table shows the maximum price each retail outlet is willing to pay for each individual software product.
Product W Product S
Retail #1 $170 $105
Retail #2 $95 $135
What is the optimal pricing strategy that will maximize revenue for the manufacturer, given the maximum the retail outlets are willing to pay?
a. Bundle both products (W and S) and sell them at $230.
b. Price product W at $170 and Product S at $135.
c. Price product W at $170 and Product S at $170.
d. Price product W at $95 and Product S at $105.
e. Bundle both products (W and S) and sell them at $275

Purchase this Solution
Solution Summary

Discussion of pricing strategy, bundling, and Cournot equilibrium

Solution Preview

1. Suppose that in a perfectly competitive industry the equilibrium industry quantity is 10,000 units. Suppose that the monopoly output is 5,000. For a 2-firm Cournot Oligopoly (N =2) known as a duopoly, what is a likely Cournot QUANTITY for the industry?
a. 3, 000 units
b. 5,000 units
c. 6,667 units
d. 10,000 units
e. 15,000 units

The Cournot equilibrium quantity always lies between the monopoly and competitive market equilibrium quantities. This is due to the fact that duopoly contains some ...

Purchase this Solution
Free BrainMass Quizzes
Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

View More Free Quizzes
Related BrainMass Solutions

  • Equilibrium deadweight loss in duopoly

    Equilibrium deadweight loss in Cournot duopoly given demand and cost functions

  • cournot duopoly

    of perfect competition, we know that P=MR=MC So we have P=5 5=20-2Q solving we get Q=7.5, Profits =7.5*(5-5)=0 This job assesses cournot duopoly.

  • Equilibium Output in a Cournot Duopoly

    Equilibium Output in a Cournot Duopoly given demand and cost functions

  • question on Bertrand and Cournot Equilibriums

    In a two-market Bertrand duopoly, each of two firms chooses one of two markets and a price in that market. All four choices are made simultaneously. In a two-market Cournot duopoly, the firms choose quantities rather than prices.

  • Cournot Duopoly: Determining Equilibrium Price and Quantity

    357785 Cournot Duopoly: Determining Equilibrium Price and Quantity Two identical firms compete in a cournot duopoly. The demand faced P= 100-2Q. The cost function firm C(Q)= 4Q. What is Nash equilibrium?

  • Cournot Equilibrium, Monopoly, Duopoly

    Then we have: 1 - 2Q = 0 1 = 2Q Q = 0.5 Market price is P = 1 - 0.5 = 0.5 Price for the monopoly firm is then P*Q = 0.5 * 0.5 = 0.25 Cournot Equilibrium, Monopoly, and Duopoly are emphasized.

  • Cournot Duopoly - Reaction Functions

    299039 Cournot Duopoly - Reaction Functions Starting with the reaction functions of duopolists A and B from Problem 4, find the Cournot solution algebraically.

  • Problems in market structures

    Cournot C. Bertrand D. Stackelberg and Cournot Answer: D. Stackelberg and Cournot In a market where two firms compete by setting quantity, the Cournot equilibrium has which of the following characteristics? A.

  • Reaction function, equilibrium output and market price

    Thus we have: P = 1,250 - Q MC= 50 50 = 1250-Q Q = 1200, which is greater than output under Cournot duopoly. i. Rank the market output (Qo, QM , QPC, QMC ) from the lowest to the highest.

View More Related Solutions