« previous next »

Author Question: Explain why the intersection of the best-response functions is the Cournot equilibrium. What will ... (Read 21 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?

Over time, chronic hepatitis B virus and hepatitis C virus infections can progress to advanced liver disease, liver failure, and hepatocellular carcinoma. Unlike other forms, more than 80% of hepatitis C infections become chronic and lead to liver disease. When combined with hepatitis B, hepatitis C now accounts for 75% percent of all cases of liver disease around the world. Liver failure caused by hepatitis C is now leading cause of liver transplants in the United States.

Did you know?

After 5 years of being diagnosed with rheumatoid arthritis, one every three patients will no longer be able to work.

Did you know?

As the western states of America were settled, pioneers often had to drink rancid water from ponds and other sources. This often resulted in chronic diarrhea, causing many cases of dehydration and death that could have been avoided if clean water had been available.

Did you know?

Asthma occurs in one in 11 children and in one in 12 adults. African Americans and Latinos have a higher risk for developing asthma than other groups.

Did you know?

In 2006, a generic antinausea drug named ondansetron was approved. It is used to stop nausea and vomiting associated with surgery, chemotherapy, and radiation therapy.

Basic graphs of functions Basic graphs of functions
Individual Tubule Functions Individual Tubule Functions
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)
Derivatives of reciprocal trigonometric functions Derivatives of reciprocal trigonometric functions
Finding derivatives of Exponential functions - pt 2 Finding derivatives of Exponential functions - pt 2
Write equilibrium constant expressions for the following reactions in terms of concentration: Write equilibrium constant expressions for the following reactions in terms of concentration:
Video: Acid-base imbalances - compensation of respiratory acidosis and alkalosis

For a complete list of videos, visit our video library