Assume that two companies (C and D) are Cournot duopolists that produce identical products. Demand for the products is given by the following linear demand function: P = 600 - Qc - QD %3D where Qc and Qp are the quantities sold by the respective firms and P is the price. Total cost functions for the two companies are TC 25,000 + 100QC TC, = 20,000 + 125QD %3D a. Determine the profit functions for both firms. b. Given the cost functions, which firm will produce more in an equilibrium? c. Determine the equilibrium price and quantities sold by each firm. d Determine the profits for the market as well as each firm.

Assume that two companies (C and D) are Cournot duopolists that produce identical products. Demand for the products is given by the following linear demand function: P = 600 - Qc - QD %3D where Qc and Qp are the quantities sold by the respective firms and P is the price. Total cost functions for the two companies are TC 25,000 + 100QC TC, = 20,000 + 125QD %3D a. Determine the profit functions for both firms. b. Given the cost functions, which firm will produce more in an equilibrium? c. Determine the equilibrium price and quantities sold by each firm. d Determine the profits for the market as well as 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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Additional Problem 3: Assume two companies (C and D) are Cournot duopolists that produce identical products. Demand for the products is given by the following linear demand function: ? = 600 − ?C − ?D where ?C and ?D are the quantities sold by the respective firms and P is the price. Total cost functions for the two companies are ??C= 25,000 +100?C 2 ??D = 20,000 + 125?D c. Determine the equilibrium price and quantities sold by each firm. d.Determine the profits for the market as well as eachfirm.
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