I need help with the following homework! Questions 5-7 (Sweezy oligopoly) CheapO

Question

I need help with the following homework!

Questions 5-7 (Sweezy oligopoly) CheapO Buy and Value Buy are two online retailers that compete in an Internet market for HTV and this market is characterized by Sweezy oligopoly (duopoly). The two inverse demand curves for the Value Buy are ( P 1,250-2.50 (ii) P=850-0,500 Which equation expresses the match demand curve? a. Equation (i) b. Equation (ii) c. An aggregate of both equations. 5. 6. What should be done to calculate the reference price Po and reference quantity Qo for this model? Calculate them? (a) Solve the equation in (a) for the reference quantity and the answers are Po $500 and Qo=100. (b) Solve equation (b) for the reference price and quantity and the answers are Po $250 and Qo =50. (c) Set equation (a) equal to equation (b) and solve for the reference quantity and the reference price and the solution is Po - $750 and Oo -200 units. 7. This Sweezy oligopoly model captures or explains (a) Collusion. (b) Zero sum game. (c) Price stability. Questions 8-11 (Cournot oligopoly) In a homogenous Courmol, apsc thon s ghien bn

Explanation / Answer

Answer of 5

P=1250-2.5Q to find demand function for this inverse demand function

Q=500-0.4P

P=850-0.5Q for this inverse demand function

We have demand functon

Q=1700-2P

( We need to write it in quantity term to get demand function unlike inverse demand function

Aggregate Inverse Demand is  

P= 2100-3Q

Hence Aggregate Demand function is

Q=700-0.33P

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