Suppose we have a duopoly with Firm 1 and Firm 2 and the following inverse demand function: P = 100 – 5(Q1 + Q2) Total Cost and Marginal Cost values for firms 1 and 2 are: TC1 = 20Q1 TC2 = 30Q2 MC1 = 20 MC2 = 30 Assuming a Cournot Duopoly, the following response functions are derived: Firm 1: Q1 = 8 – 0.5Q2 Firm 2: Q2 = 7 – 0.5Q1 Using this information, calculate the quantity produced for each firm, the price, and profits for each firm and the market as a whole.
Suppose we have a duopoly with Firm 1 and Firm 2 and the following inverse demand function: P = 100 – 5(Q1 + Q2) Total Cost and Marginal Cost values for firms 1 and 2 are: TC1 = 20Q1 TC2 = 30Q2 MC1 = 20 MC2 = 30 Assuming a Cournot Duopoly, the following response functions are derived: Firm 1: Q1 = 8 – 0.5Q2 Firm 2: Q2 = 7 – 0.5Q1 Using this information, calculate the quantity produced for each firm, the price, and profits for each firm and the market as a whole.
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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Suppose we have a duopoly with Firm 1 and Firm 2 and the following inverse demand function:
P = 100 – 5(Q1 + Q2)
Total Cost and Marginal Cost values for firms 1 and 2 are:
TC1 = 20Q1
TC2 = 30Q2
MC1 = 20
MC2 = 30
Assuming a Cournot Duopoly, the following response functions are derived:
Firm 1: Q1 = 8 – 0.5Q2
Firm 2: Q2 = 7 – 0.5Q1
Using this information, calculate the quantity produced for each firm, the price, and profits for
each firm and the market as a whole.
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