Suppose we have the "classic" Cournot duopoly model, with a linear demand curve P = a - bQ And two firms which are identical, each with total costs TC(q) = c + dq. (a) What is the market price in the Cournot equilibrium and what profit is earned by an individual firm? (b) Compare individual quantity, market quantity, market price, individual profits and consumer surplus ( show it in a graph) to the outcomes of this market were a monopoly. Comment on your results. Show all the steps of the calculation
Suppose we have the "classic" Cournot duopoly model, with a linear demand curve P = a - bQ And two firms which are identical, each with total costs TC(q) = c + dq. (a) What is the market price in the Cournot equilibrium and what profit is earned by an individual firm? (b) Compare individual quantity, market quantity, market price, individual profits and consumer surplus ( show it in a graph) to the outcomes of this market were a monopoly. Comment on your results. Show all the steps of the calculation
Chapter10: Monopolistic Competition And Oligoply
Section: Chapter Questions
Problem 20SQ
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Suppose we have the "classic" Cournot duopoly model, with a linear demand curve P = a - bQ And two firms which are identical, each with total costs TC(q) = c + dq.
(a) What is the market price in the Cournot equilibrium and what profit is earned by an individual firm?
(b) Compare individual quantity, market quantity, market price, individual profits and consumer surplus ( show it in a graph) to the outcomes of this market were a
Comment on your results. Show all the steps of the calculation
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