Two firms facing a demand curve are P = 50 -5Q where Q = Q1 + Q2. The cost functions of the two firms are: C1(Q1) = 20 + 10Q1 C2(C2) = 10 + 12Q2 Based on this information: a. Suppose both companies have entered the industry, then what is the price? and the profit-maximizing amount for the two firms under conditions perfectly competitive market? b. What is the quantity, price and profit of the two firms if companies collude in pricing? c. What are the quantities, prices, and profits of the two firms if they do the Cournot strategy, and draw the reaction curves of the two the company?

Two firms facing a demand curve are P = 50 -5Q where Q = Q1 + Q2. The cost functions of the two firms are: C1(Q1) = 20 + 10Q1 C2(C2) = 10 + 12Q2 Based on this information: a. Suppose both companies have entered the industry, then what is the price? and the profit-maximizing amount for the two firms under conditions perfectly competitive market? b. What is the quantity, price and profit of the two firms if companies collude in pricing? c. What are the quantities, prices, and profits of the two firms if they do the Cournot strategy, and draw the reaction curves of the two the company?

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter8: Monopoly

Section: Chapter Questions

Problem 5SQP

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