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.
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
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
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.
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.
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???
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.
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.
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.
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
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 .
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?
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: th-cam.com/video/mhs2Cd-k8uo/w-d-xo.html
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.
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
@@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 😊
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.
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
My term 1 MBA exams are tomorrow and here I am, thankyou so much
This has been more helpful than a 2 hour lecture on this topic! Thanks so much
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
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.
God bless you and your children :D 4:35 "nananana..."
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
Great, accessible explanation! Helped with last minute studying for my intermediate microeconomics final. Many thanks!
Thank you for saving me before my exam 🙏🙏
You are welcome!
I just wanted to say thank you so much, this was way more useful than the stuff in class very easy and straight forward!
11 years later, still helpful!
Thank you so much! This was very helpful before my final exam.
This is very benefit a video. Thank you so much 🙏🙏🙏
Very easy to understand, thank you for the explanation.
What I needed :)) Easy to understand and brief ! Thank you !
You are welcome!
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, it help me a lot, I passed my exam with 89% :)
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
Thank you so much! Only decent video on Stackelberg I found so far.
this helped a lot with a trivial matter
thanks a lot sir
Thank you for the understandable tutorials. Both the cournot and this one
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.
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?
Am getting P=0 and q2 as 0 is that normal?
no
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???
thank you!! i managed to answer my quiz problems~
hi there when you differenciate p to mr in respect to q1 would the 70 not disappear and the mr=-q1???
thanks for this video it helped me pass the test
OMG what did you do to the kid between pause ^^ I laughed there ^^ Great video though thanks.
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.
your explanation is amazing...on point...thanks hey
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!
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.
Thank you very much!!! good explanation.
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.
Thanks, Understood clearly
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..
what if firm 2 has a fixed cost to enter the market? will it change its MC?
Same question 🙋
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
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 .
Can you please explain how differentiating 70-1/2 Q1 makes 70-Q1
have you figured it out yet???\
Good explanations :) Thank you
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 a lot, this was helpful !!
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.
I wish my dad was an econ master
Top dad
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?
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: th-cam.com/video/mhs2Cd-k8uo/w-d-xo.html
Thank you so much, it helps a lot.
thanks man, very useful
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. 🙏🙏
thank you it was extremely helpful
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.
thanks, great help for the upcoming test (:
Thank you, very useful content!
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.
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: th-cam.com/video/X-rrV9QsUAo/w-d-xo.html
Very helpful. thanks 😊
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 😊
Thanks Guys really helpfull.
thanks very much. That helped
you video saved my ass, thx
I am glad to hear that!
Can you please make an example of multi leader followers game؟
You are a god. My savior.
thanks
You are welcome!
Thank you so much!
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.
Bless your soul.
Nice one
Great Stuff but MR1 = Q1
really good!!
Thank u so muchhh
THANK YOU
i don't know how can i thanks you
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.
THANK YOU!!!!!!
Don't know if you can help with a simple "problem" on stackelberg.
INTRESTING
MY MAN!
veeeeery nice ??
this must be absolute bs, if i calculate it the way u do with my example its totally wrong
Not bad！
verheerend nicke
❤
Set speed to 1,25x. Jeez dis dude is slow.
THANK YOU