(6) For each situation, solve for the Cournot-Nash equilibrium (Capacity Constraints) 6a) Suppose Sarah’s constant marginal cost is $5 but Joe's is $8. Recall that in a Cournot model, products are homogeneous. So each supplier faces the same aggregate demand function: P(Q) = 20 – 0.1 Q where Q = Qjoe + Qsarah 6b) Suppose Joe and Sarah have the same cost functions as earlier (constant MC of $5) but market inverse demand is now P(Q) = 30 – 0.2Q

(6) For each situation, solve for the Cournot-Nash equilibrium (Capacity Constraints) 6a) Suppose Sarah’s constant marginal cost is $5 but Joe's is $8. Recall that in a Cournot model, products are homogeneous. So each supplier faces the same aggregate demand function: P(Q) = 20 – 0.1 Q where Q = Qjoe + Qsarah 6b) Suppose Joe and Sarah have the same cost functions as earlier (constant MC of $5) but market inverse demand is now P(Q) = 30 – 0.2Q

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.3P

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