« previous next »

Author Question: Explain why the intersection of the best-response functions is the Cournot equilibrium. What will ... (Read 10 times)

Tazate

  • Hero Member
  • *****
  • Posts: 532
on: Jul 1, 2018
Explain why the intersection of the best-response functions is the Cournot equilibrium.
 
  What will be an ideal response?

Question 2

If the price of a competitive firm's output increases, the firm responds in the short run by demanding more labor.
 
  What will be an ideal response?
Microeconomics ¦ Perloff ¦ 8th Edition
Buy Test-Bank


SVictor

  • Sr. Member
  • ****
  • Posts: 365
Reply #1 on: Jul 1, 2018
Answer to Question 1

On a best-response function, a firm selects the profit-maximizing level of output given the level of output it believes the other firm will produce. At the intersection of the best-response functions, what one firm believes the other firm will produce actually is the amount the other firm produces. Thus, neither firm has an incentive to change the level of output.

Answer to Question 2

True. The firm wishes to sell more output and can do so only by hiring more labor.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

The National Institutes of Health have supported research into acupuncture. This has shown that acupuncture significantly reduced pain associated with osteoarthritis of the knee, when used as a complement to conventional therapies.

Did you know?

Anesthesia awareness is a potentially disturbing adverse effect wherein patients who have been paralyzed with muscle relaxants may awaken. They may be aware of their surroundings but unable to communicate or move. Neurologic monitoring equipment that helps to more closely check the patient's anesthesia stages is now available to avoid the occurrence of anesthesia awareness.

Did you know?

Pubic lice (crabs) are usually spread through sexual contact. You cannot catch them by using a public toilet.

Did you know?

In 1886, William Bates reported on the discovery of a substance produced by the adrenal gland that turned out to be epinephrine (adrenaline). In 1904, this drug was first artificially synthesized by Friedrich Stolz.

Did you know?

The FDA recognizes 118 routes of administration.

The cellular response of skeletal muscle cells to epinephrine The cellular response of skeletal muscle cells to epinephrine
How to find the derivatives of trigonometric functions using the chain rule (Part 2) How to find the derivatives of trigonometric functions using the chain rule (Part 2)
How to evaluate functions when x is given How to evaluate functions when x is given
Facility Emergency Response Plans. Courtesy of Chris Weber, Dr. Hazmat, Inc. Facility Emergency Response Plans. Courtesy of Chris Weber, Dr. Hazmat, Inc.
Functions and Properties of Blood Functions and Properties of Blood
Experiments showing that long- or short-day plants flower in response to night length. Each horizont Experiments showing that long- or short-day plants flower in response to night length. Each horizont
Video: Virtual Tour of the Eye Animation

For a complete list of videos, visit our video library