Suppose two firms, Firm A and Firm B, are competing by setting quantities (Cournot competition). Firm A has a constant marginal cost of $10 per unit; Firm B has a constant marginal cost of $15 per unit. Assume fixed costs are equal to 0 for both firms. Hint: since fixed costs are zero and the marginal cost is constant, MC = AC. The two firms choose between producing 50 units or 100 units. If the total output is 100 units, the price is $20 per unit; if total output is 150 units, the price is $15 per unit; if total output is 200 units, the price is $10 per unit. Based on the information provided, fill in the firms’ profits in the payoff matrix below with Firm A choosing the row and Firm B choosing the column. QB=100 QB=50
Suppose two firms, Firm A and Firm B, are competing by setting quantities (Cournot competition). Firm A has a constant marginal cost of $10 per unit; Firm B has a constant marginal cost of $15 per unit. Assume fixed costs are equal to 0 for both firms. Hint: since fixed costs are zero and the marginal cost is constant, MC = AC.
The two firms choose between producing 50 units or 100 units. If the total output is 100 units, the
Based on the information provided, fill in the firms’ profits in the payoff matrix below with Firm A choosing the row and Firm B choosing the column.
| QB=100 | QB=50 | |||
|---|---|---|---|---|
| QA=100 | , | , | ||
| QA=50 | , | , |
The resulting equilibrium is for Firm A to produce ____ (50 or 100)units and Firm B to produce_____ (50 or 100) units.
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