In a given market the demand for a homogenous product is given by p(q) = 120 – 5Q. The markethas two firms, firm 1 has a marginal cost cı5 and firm 2 has a marginal cost c2 =: 10.(i) Assume that the firms compete in a Cournot game. Compute the price in equilibrium, quantityproduced by each firm and deadweight loss generated in this market.

Perfect competition Dead weight loss= 5×(Q1-Q2)×(P2-P1)

a given market the demand for a homogenous product is given by p(q) = 120 – 5Q. The market as two firms, firm 1 has a marginal cost c1 5 and firm 2 has a marginal cost c2 = 10. ) Assume that the firms compete in a Cournot game. Compute the price in equilibrium, quantity roduced by each firm and deadweight loss generated in this market.

a given market the demand for a homogenous product is given by p(q) = 120 – 5Q. The market as two firms, firm 1 has a marginal cost c1 5 and firm 2 has a marginal cost c2 = 10. ) Assume that the firms compete in a Cournot game. Compute the price in equilibrium, quantity roduced by each firm and deadweight loss generated in this market.

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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