2. Two companies (A and B) are duopolists that produce identical products. Demand for the products is given by the following demand function: P = 10,000 - QA- QB where QA and QB are the quantities sold by the respective firms and P is the selling price.. Total cost functions for the two companies are: TCA = 500,000 + 200Q A + .5Q A?? ТСВ 3 200,000+ 400 QB + QВ "? Assume that the firms form a cartel to maximize total industry profits (sum of Firm A and Firm B profits). Determine the optimum output and selling price for each firm.
2. Two companies (A and B) are duopolists that produce identical products. Demand for the products is given by the following demand function: P = 10,000 - QA- QB where QA and QB are the quantities sold by the respective firms and P is the selling price.. Total cost functions for the two companies are: TCA = 500,000 + 200Q A + .5Q A?? ТСВ 3 200,000+ 400 QB + QВ "? Assume that the firms form a cartel to maximize total industry profits (sum of Firm A and Firm B profits). Determine the optimum output and selling price for each firm.
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter12: Price And Output Determination: Oligopoly
Section: Chapter Questions
Problem 2E
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Transcribed Image Text:2. Two companies (A and B) are duopolists that produce identical
products. Demand for the products is given by the following demand
function:
P = 10,000 - QA - QB
where QA and QB are the quantities sold by the respective firms and
P is the selling price.
Total cost functions for the two companies are:
TCA = 500,000 + 200Q A + .5Q A²?
TCB = 200,000 + 400 QB + QB ²?
Assume that the firms form a cartel to maximize total industry
profits (sum of Firm A and Firm B profits). Determine the optimum
output and selling price for each firm.
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