uppose that the market demand for mountain spring water is given as follows: P = 1200 - Q Mountain spring water can be produced at no cost. Determine the level of output produced and price charged by each firm in a Cournot duopoly.

Microeconomic Theory
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ISBN:9781337517942
Author:NICHOLSON
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Chapter14: Monopoly
Section: Chapter Questions
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Suppose that the market demand for mountain spring water is given as follows: P = 1200 - Q

  1. Mountain spring water can be produced at no cost. Determine the level of output produced and price charged by each firm in a Cournot duopoly. 
  2. A monopolist faces a demand with constant elasticity of -2.0.It has a constant marginal cost of R20 per unit and sets a price to maximise its profit. If marginal cost should increase by 25 percent, would the price charged also rise by 25 percent? Provide a brief explanation.
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A monopolist faces a demand with constant elasticity of -2.0.It has a constant marginal cost of R20 per unit and sets a price to maximise its profit. If marginal cost should increase by 25 percent, would the price charged also rise by 25 percent? Provide a brief explanation.

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