Question

2. (15 points) The market demand curve for promise is given by \( Q=800-4 P \), where \( Q \) is the promise demanded per day and \( \mathrm{P} \) is the promise price in dollars. Individuals in this industry supply promise every day, and the resulting market price occurs at the point at which the promise demanded equals the total promise supplied. Suppose there are two suppliers in this industry, Cumhuriyet and Hürriyet. Each supplier has an identical constant marginal cost of 125 TL per unit. a) Find the Cournot equilibrium quantities for suppliers. What is the Cournot equilibrium market price? b) Assuming that Hürriyet is the Stackelberg leader, find the Stackelberg equilibrium quantities for each supplier. What is the Stackelberg equilibrium price? c) Calculate and compare the profit of each supplier under the Cournot and Stackelberg equilibria. Under which equilibrium is overall industry profit the greatest, and why?

          2. (15 points) The market demand curve for promise is given by \( Q=800-4 P \), where \( Q \) is the promise demanded per day and \( \mathrm{P} \) is the promise price in dollars. Individuals in this industry supply promise every day, and the resulting market price occurs at the point at which the promise demanded equals the total promise supplied. Suppose there are two suppliers in this industry, Cumhuriyet and Hürriyet. Each supplier has an identical constant marginal cost of 125 TL per unit.
a) Find the Cournot equilibrium quantities for suppliers. What is the Cournot equilibrium market price?
b) Assuming that Hürriyet is the Stackelberg leader, find the Stackelberg equilibrium quantities for each supplier. What is the Stackelberg equilibrium price?
c) Calculate and compare the profit of each supplier under the Cournot and Stackelberg equilibria. Under which equilibrium is overall industry profit the greatest, and why?

2. (15 points) The market demand curve for promise is given by Q=800-4 P, where Q is the promise demanded per day and P is the promise price in dollars. Individuals in this industry supply promise every day, and the resulting market price occurs at the point at which the promise demanded equals the total promise supplied. Suppose there are two suppliers in this industry, Cumhuriyet and Hürriyet. Each supplier has an identical constant marginal cost of 125 TL per unit.
a) Find the Cournot equilibrium quantities for suppliers. What is the Cournot equilibrium market price?
b) Assuming that Hürriyet is the Stackelberg leader, find the Stackelberg equilibrium quantities for each supplier. What is the Stackelberg equilibrium price?
c) Calculate and compare the profit of each supplier under the Cournot and Stackelberg equilibria. Under which equilibrium is overall industry profit the greatest, and why?

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