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(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 %3D 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 %3D 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

Economics: Private and Public Choice (MindTap Course List)
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter24: Price-searcher Markets With High Entry Barriers
Section: Chapter Questions
Problem 9CQ
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(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 %3D 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
Transcribed Image Text:(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 %3D 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
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