Considering that your company and two other competing companies sell a similar product in a market governed by the Cournot model in which the demand function is given by p = R $ 20,000 -0.5 (q1 + q2 + q3) and the cost of the product defined in R $ 1,600.00 a) Calculate the quantity, price and profit in this scenario; b) Due to financial instability, one of the companies is filing for bankruptcy. With this change in the dispute for the market what is the expectation of changes in quantity, price and profit for the companies that will remain in the market.

Considering that your company and two other competing companies sell a similar product in a market governed by the Cournot model in which the demand function is given by p = R $ 20,000 -0.5 (q1 + q2 + q3) and the cost of the product defined in R $ 1,600.00 a) Calculate the quantity, price and profit in this scenario; b) Due to financial instability, one of the companies is filing for bankruptcy. With this change in the dispute for the market what is the expectation of changes in quantity, price and profit for the companies that will remain in the 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

Chapter15A: Auction Design And Information Economics

Section: Chapter Questions

Problem 7E

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