time flies by so quickly , i am also in the first semester in university ,wish 3 years later i can give you my life answer ,but surely , i think i will head to the master degree...@@alitanman26
THANK YOU!! I have my exam tomorrow, and I can without a doubt say, I learnt more from your channel in 30 mins than I ever did during any two hour lecture.
Firm 1's inverse demand is P = 70 - 0.5q1. Firm 1's total revenue, TR = P x q1, TR = (70 - 0.5q1)q1 Multiply through by q1 gives TR = 70q1 -0.5q1^2 Take derivative to get: MR = dTR/dq1 = 70 - 2(0.5)q1 = 70 - q1. A short-cut method: given an inverse demand given by P = a - bq, the marginal revenue equation will be the same as the price equation but with a slope that is twice as steep: MR = a - 2bq.
𝑞1 = 720 − 2𝑝1 + 𝑝2 𝑞2 = 720 − 2𝑝2 + 𝑝1 Compute each firm’s output at the subgame perfect equilibrium of the sequential game when firm 1 is the leader, and the firms compete on quantity. How to do this question please???
Hello mate, Thank you for making me understand the stackelberg model. I have a small question, How did you derive MR = 70 - q1, from P=70-1/2q1? Please help, Many Thanks,
Yoges Ramsurrun Let me explain it two ways. First, MR is exactly like the inverse demand equation but with a slope that is twice as steep. So if P = a- bQ, MR = a - 2bQ. In the video P = 70 - 0.5Q, so MR = 70 - 2(0.50)Q, which equals 70 - Q. Second, a firm's revenue (R) = price times quantity, or R = PQ. substitute the inverse demand equation into revenue equation to get: R = (70 - 0.5Q)Q = 70Q - 0.5Q^2. Take the derivative of the revenue function (R = 70Q - 0.5Q^2) to get MR, which gives MR = 70 - Q.
A quick tip, If you have already solved the same equation for a Cournot equilibrium, the Stackleburg solution will just be, the (Cournot equilibrium)x(3/4) For Example q2=(Cournot EQ)*(3/4) q1=q2*2 In the context of this series... q2=20*(3/4) q2=15 q1=15*2 q1=30
thank you so much!!!!!!!!!!!!!it is an exceptional video! i have nothing understood through my university's lessons, Yours sincerely Konstantinos S.Apostolopoulos/DMS,MBA NTU
Shouldn't the reaction function from Firm 2 be substituted into the profit function of Firm 1, instead of the revenue function? Since the problem faced by Firm 1 is to optimise profit and not revenue.
Firm 1 profit = TR (Q1, Q2) - TC (Q1). You can substitute into either the revenue or profit function...you get the same result either way because firm 2's output is only part of the revenue function of firm 1.
There are two firms whose market demand is :Q=3200-1600P. Their costs are - Firm1 :TC1 =0.25q1 and Firm2 : TC2 =0.5q2 . Firm1 is leader whike firm2 is follower , solve for stackleberg output levels ,market price and profit levels of the firms. I'm not able to get the answer, please help me out .
If you have two cost functions (one for each firm), which one do you differentiate to get MC? Or do you combine them to get TC and then differentiate? Great video thanks!
You will differentiate both cost functions to get the MC of firm 1 and MC of firm 2. You will set the MR of firm 1 (Stackelberg leader) equal to firm 1's MC. When deriving firm 2's reaction function (as shown in my Cournot video), you should set firm 2's MR equal to firm 2's MC.
What if firm 2 is the mover and firm 1 is to follow? I suggest you make a video of a solution of such situation with different cost structures. Thank you
but what if the firms face 2 different MC, the example im trying to complete changes the MC of one firm from when the reaction functions were worked out.
Well appreciated but the TC was not specified either for Q1 or Q2 so differentiating it to get MC which is equal to c and equal to MR at equilibrium is not understandable to me. 🙏🙏
How did you made the partial derivation of IT=70P-1/2(q1)(P) shouldn´t it be Img=70+1/2(q1) ??? Thank you for your answer. (Great job by the way! Helps a lot!)
César Alfonso García Valdés You multiply Pxq1 to get TR, then find the partial derivative of TR/q1. It should look like this instead. symbolab.com/solver/partial-derivative-calculator/%5Cfrac%7Bd%7D%7Bdq%7D(70q-%5Cfrac%7B1%7D%7B2%7Dqq). Cheers.
How do you calculate the profit? I mean I know its the Stackelberg price times the Monopoly quantity subtracted by the cost etc. But why is the monopoly quantity used not the Stackelberg quantity to get profit?
I have a problem like this.where i need to find the Stackelberg market equilibrium. Market demand is Q=3200-1600p where Q=Q1+Q2 and the cost function of two firms 1(the leader) and 2 (the follower) are: TC1(Q1)= 0.25Q1 and TC2= 0.5Q2. Will you please solve this for me.I will be helpful to you..
why the reaction function value is not included while calculating marginal cost, since q2 is also a function of q1 therefore Marginal cost should be 20. Please reply ASAP thanks
Thank you for the explanation. I am going through looking for easy videos for Cournot, Betrand, Sweezy and Stackleberg. Also, sounds like someone is reaching out from the beyond at the 2:10. The ghost of Stackleberg.
In Cournot, assuming each firm has the same marginal cost (or MC = 0 for both firms), each firm will produce the same quantity of output. In Stakelberg, with the same conditions, the Stackleberg leader will produce twice as much output as the other firm. Try this video: ua-cam.com/video/mhs2Cd-k8uo/v-deo.html
The presence of fixed cost will not affect marginal cost. Fixed cost is just a constant, and the derivative of a constant is zero. If this video used fixed cost like TC = 40Q + 200, the answers would be unchanged.
@@EconomicsinManyLessons thank you so much sir..! Tomorrow is my exam..!and Am so much confused...!! But m clear in stackelberg and cournot..! For this ! Thanks to you 😊
You explained this better than my book and college professor could do in weeks. God bless you
My online microeconomics lecturer is abysmal. These videos are helping me understand stuff massively. Thank you!
More than i would ever learn in class.. Thanks so much!
+lol m2k explained in 5mins :D
Thanks man. I'm currently in my first semester at university and these simple examples makes studying for exams so easy
How has life been after graduation?
time flies by so quickly , i am also in the first semester in university ,wish 3 years later i can give you my life answer ,but surely , i think i will head to the master degree...@@alitanman26
This has been more helpful than a 2 hour lecture on this topic! Thanks so much
THANK YOU!! I have my exam tomorrow, and I can without a doubt say, I learnt more from your channel in 30 mins than I ever did during any two hour lecture.
how did you get from p=70-1/2 q1 to MR1=70-q1?
Firm 1's inverse demand is P = 70 - 0.5q1.
Firm 1's total revenue, TR = P x q1,
TR = (70 - 0.5q1)q1
Multiply through by q1 gives TR = 70q1 -0.5q1^2
Take derivative to get: MR = dTR/dq1 = 70 - 2(0.5)q1 = 70 - q1.
A short-cut method: given an inverse demand given by P = a - bq, the marginal revenue equation will be the same as the price equation but with a slope that is twice as steep: MR = a - 2bq.
1sportingclays THIS IS WHAT I NEEDED TO SEE!!! THANK YOU!!
1sportingclays thanks
thanks so much!
Dealing with Monopoly (The first mover works as a monopoly at that stage), in that shape of equation, u simply multiply *2 the q coefficient.
My term 1 MBA exams are tomorrow and here I am, thankyou so much
Great, accessible explanation! Helped with last minute studying for my intermediate microeconomics final. Many thanks!
God bless you and your children :D 4:35 "nananana..."
I just wanted to say thank you so much, this was way more useful than the stuff in class very easy and straight forward!
Thank you for saving me before my exam 🙏🙏
You are welcome!
11 years later, still helpful!
𝑞1 = 720 − 2𝑝1 + 𝑝2
𝑞2 = 720 − 2𝑝2 + 𝑝1
Compute each firm’s output at the subgame perfect equilibrium of the sequential game when
firm 1 is the leader, and the firms compete on quantity.
How to do this question please???
Hello mate,
Thank you for making me understand the stackelberg model.
I have a small question,
How did you derive MR = 70 - q1, from P=70-1/2q1?
Please help,
Many Thanks,
Yoges Ramsurrun Let me explain it two ways. First, MR is exactly like the inverse demand equation but with a slope that is twice as steep. So if P = a- bQ, MR = a - 2bQ. In the video P = 70 - 0.5Q, so MR = 70 - 2(0.50)Q, which equals 70 - Q. Second, a firm's revenue (R) = price times quantity, or R = PQ. substitute the inverse demand equation into revenue equation to get: R = (70 - 0.5Q)Q = 70Q - 0.5Q^2. Take the derivative of the revenue function (R = 70Q - 0.5Q^2) to get MR, which gives MR = 70 - Q.
@@EconomicsinManyLessons thank you
A quick tip, If you have already solved the same equation for a Cournot equilibrium, the Stackleburg solution will just be, the (Cournot equilibrium)x(3/4)
For Example
q2=(Cournot EQ)*(3/4)
q1=q2*2
In the context of this series...
q2=20*(3/4)
q2=15
q1=15*2
q1=30
Thank you so much! This was very helpful before my final exam.
thank you so much!!!!!!!!!!!!!it is an exceptional video! i have nothing understood through my university's lessons, Yours sincerely Konstantinos S.Apostolopoulos/DMS,MBA NTU
What I needed :)) Easy to understand and brief ! Thank you !
You are welcome!
Very easy to understand, thank you for the explanation.
Thank you so much! Only decent video on Stackelberg I found so far.
Thank you for the understandable tutorials. Both the cournot and this one
OMG what did you do to the kid between pause ^^ I laughed there ^^ Great video though thanks.
Thank you, it help me a lot, I passed my exam with 89% :)
Shouldn't the reaction function from Firm 2 be substituted into the profit function of Firm 1, instead of the revenue function? Since the problem faced by Firm 1 is to optimise profit and not revenue.
Firm 1 profit = TR (Q1, Q2) - TC (Q1). You can substitute into either the revenue or profit function...you get the same result either way because firm 2's output is only part of the revenue function of firm 1.
this helped a lot with a trivial matter
thanks a lot sir
This is very benefit a video. Thank you so much 🙏🙏🙏
There are two firms whose market demand is :Q=3200-1600P. Their costs are - Firm1 :TC1 =0.25q1 and Firm2 : TC2 =0.5q2 . Firm1 is leader whike firm2 is follower , solve for stackleberg output levels ,market price and profit levels of the firms.
I'm not able to get the answer, please help me out .
Top dad
If you have two cost functions (one for each firm), which one do you differentiate to get MC? Or do you combine them to get TC and then differentiate? Great video thanks!
You will differentiate both cost functions to get the MC of firm 1 and MC of firm 2. You will set the MR of firm 1 (Stackelberg leader) equal to firm 1's MC. When deriving firm 2's reaction function (as shown in my Cournot video), you should set firm 2's MR equal to firm 2's MC.
What if firm 2 is the mover and firm 1 is to follow? I suggest you make a video of a solution of such situation with different cost structures. Thank you
Here's a video with different cost structures: ua-cam.com/video/X-rrV9QsUAo/v-deo.html
What's weird is my firm 2's output was also half of firm 1's output? Why is this happening
This is a feature of the model whenever both firms have the same marginal cost.
@@EconomicsinManyLessons Awesome, thanks for still replying!
I can't thank you enough for this, brilliantly articulated. My math is terrible but you have ensured I'll do good in my Micro exam....gana graduate :D
AlamedanBreezyRep me too :) is ur major econ as well?
thanks for this video it helped me pass the test
hi there when you differenciate p to mr in respect to q1 would the 70 not disappear and the mr=-q1???
but what if the firms face 2 different MC, the example im trying to complete changes the MC of one firm from when the reaction functions were worked out.
Well appreciated but the TC was not specified either for Q1 or Q2 so differentiating it to get MC which is equal to c and equal to MR at equilibrium is not understandable to me. 🙏🙏
I wish my dad was an econ master
How did you made the partial derivation of IT=70P-1/2(q1)(P) shouldn´t it be Img=70+1/2(q1) ??? Thank you for your answer. (Great job by the way! Helps a lot!)
sorry the Img should read as follows: Img=70-1/2(q1)
symbolab.com/solver/partial-derivative-calculator/%5Cfrac%7Bd%7D%7Bdp%7D(70p-%5Cfrac%7B1%7D%7B2%7Dqp)
César Alfonso García Valdés You multiply Pxq1 to get TR, then find the partial derivative of TR/q1. It should look like this instead. symbolab.com/solver/partial-derivative-calculator/%5Cfrac%7Bd%7D%7Bdq%7D(70q-%5Cfrac%7B1%7D%7B2%7Dqq). Cheers.
How do you calculate the profit? I mean I know its the Stackelberg price times the Monopoly quantity subtracted by the cost etc. But why is the monopoly quantity used not the Stackelberg quantity to get profit?
thank you!! i managed to answer my quiz problems~
I have a problem like this.where i need to find the Stackelberg market equilibrium. Market demand is Q=3200-1600p where Q=Q1+Q2 and the cost function of two firms 1(the leader) and 2 (the follower) are: TC1(Q1)= 0.25Q1 and TC2= 0.5Q2.
Will you please solve this for me.I will be helpful to you..
why the reaction function value is not included while calculating marginal cost, since q2 is also a function of q1 therefore Marginal cost should be 20. Please reply ASAP thanks
Thanks a lot, this was helpful !!
Thank you for the explanation. I am going through looking for easy videos for Cournot, Betrand, Sweezy and Stackleberg.
Also, sounds like someone is reaching out from the beyond at the 2:10. The ghost of Stackleberg.
your explanation is amazing...on point...thanks hey
Thank you, very useful content!
If MC of the firms are 0. Then is Cournot and Stackelberg solution the same? Mine is coming the same. Just confirming
In Cournot, assuming each firm has the same marginal cost (or MC = 0 for both firms), each firm will produce the same quantity of output. In Stakelberg, with the same conditions, the Stackleberg leader will produce twice as much output as the other firm. Try this video: ua-cam.com/video/mhs2Cd-k8uo/v-deo.html
Can you please explain how differentiating 70-1/2 Q1 makes 70-Q1
have you figured it out yet???\
hello sir how did p=70-(1/2)q1
become
MR=70-q1
Please see my commemt to Jerry Yu's post. For a simple explanation, MR will equal the inverse demand with a slope that is twice as steep.
thanks man, very useful
the only problem now is I have fixed cost as well and I am not sure what to do with that :/
The presence of fixed cost will not affect marginal cost. Fixed cost is just a constant, and the derivative of a constant is zero. If this video used fixed cost like TC = 40Q + 200, the answers would be unchanged.
What is the basically difference between cournot and stackelberg?? It's actually seems same ..! Is it?
Cournot firms set their output at the same time. In Stackelberg, one firm sets it output first, the other firm then responds by setting its output.
@@EconomicsinManyLessons thank you so much sir..! Tomorrow is my exam..!and Am so much confused...!! But m clear in stackelberg and cournot..! For this ! Thanks to you 😊
what if firm 2 has a fixed cost to enter the market? will it change its MC?
Same question 🙋
Thank you so much, it helps a lot.
Can you please make an example of multi leader followers game؟
Thank you very much!!! good explanation.
how did you get MR = 70 - q1 from P = 70 - (0.5)q1 ?
Firm 1's inverse demand is P = 70 - 0.5q1.
Firm 1's total revenue, TR = P x q1,
TR = (70 - 0.5q1)q1
Multiply through by q1 gives TR = 70q1 -0.5q1^2
Take derivative to get: MR = dTR/dq1 = 70 - 2(0.5)q1 = 70 - q1.
Good explanations :) Thank you
thank you it was extremely helpful
Don't know if you can help with a simple "problem" on stackelberg.
How MC got equal to 40 as we were differentiating it with respect to q1 but TC= 40Q not 40q1
Total cost for firm 1 is TC = 49q1, the derivative is 40. Do a similar thing for firm 2, writing TC = 40q2.
thanks, great help for the upcoming test (:
You are a god. My savior.
Thanks, Understood clearly
How can you get Q2=30-1/2Q1 ?
TR2 = (100 - q1 - q2)q2 = 100q2 - q1q2 - q2^2. The partial derivative of TR2 with respect to q2 is MR2 = 100 - q1 - 2q2. Set MR2 = MC2 to get 100- q1 -2q2 = 40. Solve for q2 = 30 -1/2q1.
Bless your soul.
Very helpful. thanks 😊
Am getting P=0 and q2 as 0 is that normal?
no
Thanks Guys really helpfull.
thanks very much. That helped
Thank you so much!
you video saved my ass, thx
I am glad to hear that!
really good!!
THANK YOU!!!!!!
thanks
You are welcome!
THANK YOU
Thank u so muchhh
Nice one
Great Stuff but MR1 = Q1
MY MAN!
INTRESTING
this must be absolute bs, if i calculate it the way u do with my example its totally wrong
i don't know how can i thanks you
❤
veeeeery nice ??
Not bad！
verheerend nicke
Set speed to 1,25x. Jeez dis dude is slow.
THANK YOU