Answer Happy

Exercises Exercise 84. Consider a market with an incumbent firm 1, facing the entry of a val, firm 2. Fim 1 can make an investment, K, to accommodate or deter the entry of fem 2. The inverse demand in this market is p(Q)-16-0where Q-e+ Firms produce a homogeneous good and are Coumot competitors. Farm 1's cost function is c(K)-(4-K+K2/2 ond fm 2's cost is 2(4)-492- Start with the second-stage decisions Q13) Determine fim 1's best-response functions(K) Q14) Determine fem 2's best-response functions (4) Q15) Assuming firms 1 and 2's best-response functions are drawn on a graph with on the horizontal axis ande, on the vertical axis, determine the effects of a increase in firm f investment K, on the firms best-response functions A) Fm T's best-response function stats and fem2 best response from a p BFT best response function shs up and fm 2's best response fum C) Fim's best-response function sits up and fm 2 besponse Secon 0) FT's beatponse function shuts down and tem 2's best porse ndon shits E) Firm's best response function shits down and fm 2's terrae function white down F Fm 1 be m function shits down and fem 2 best-p Of Fum best-response fund does not move and fem HFemts best-respores function does not more c 6 Fim best response function does not m functions Ancien Exercises . Q16) Determine q(K), the quantity chosen by firm 1 as a function of K, at the equilibrium of the second-stage ▸ Q17) Determine q(K), the quantity chosen by firm 2 as a as a function of K, at the equilibrium of the second-stage. . Q18) Determine the effects of an increase in firm T's investment , on (K₂) and (K₂). A) Fim 1's output increases and fimm 2's output increases B) Fim 1's output incresses and fim 2s output decreases C) Fim T's output increases and firm 2's output does not change -Dj Fim1's output decreases and fim 2's output increases E) Fim T's output decreases and fim 2's output decreases F) Firm T's output decreases and fimm 2's output does not change G) Fim 's output does not change and fimm 2's output increases H) Fim 1% output does not change and firm 2's output decreases Firm 1's output does not change and fim 2's output does not change English (Canada) ide 47 of 50