Consider a two-firms Cournot model with constant returns to scale. Assume also that the inverse demand function is P = 100 – 2Q, with marginal cost equal to 20for both firms, where Q = q1 + q2 . b) How do equilibrium outputs and profits vary when firm1’s cost changes. Draw a picture of this outcome.
Consider a two-firms Cournot model with constant returns to scale. Assume also that the inverse demand function is P = 100 – 2Q, with marginal cost equal to 20for both firms, where Q = q1 + q2 . b) How do equilibrium outputs and profits vary when firm1’s cost changes. Draw a picture of this outcome.
Chapter15: Imperfect Competition
Section: Chapter Questions
Problem 15.3P
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Q2. Consider a two-firms Cournot model with constant returns to scale. Assume also that the inverse demand function is P = 100 – 2Q, with marginal cost equal to 20for both firms, where Q = q1 + q2 .
b) How do equilibrium outputs and profits vary when firm1’s cost changes. Draw a picture of this outcome.
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