Two firms produce the same good and compete against each other in a Cournot market. The market demand for their product is P = 204 - 4Q, and each firm has a constant marginal cost of $12 per unit. Let Q; be the output produced by firm i, where i = 1,2. Then, Firm 1's reaction function is OA. Q₁ = 24-0.5Q₂. OB. Q₁ = 25.5-0.5Q2. OC. Q₁ = 24. D. Q₁ = 24-Q₂. O E. None of the above.

Two firms produce the same good and compete against each other in a Cournot market. The market demand for their product is P = 204 - 4Q, and each firm has a constant marginal cost of $12 per unit. Let Q; be the output produced by firm i, where i = 1,2. Then, Firm 1's reaction function is OA. Q₁ = 24-0.5Q₂. OB. Q₁ = 25.5-0.5Q2. OC. Q₁ = 24. D. Q₁ = 24-Q₂. O E. None of the above.

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 3E

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