Suppose the airline industry consisted of only two firms: American and Texas Air Corp. Let the two firms have identical cost functions, C(q) - 40g Assume that the demand curve forthe industry is given by P= 190 -Q and that each firm expects the other to behave as a Cournot compedtor.Calculate the Coumot-Nash equilibrium for each firm, assuming that each chooses the output level that maximizes as profes when taking its rival's output as given. What are theprofits of each firm? (Round all quantities and dollar amounts to two decimal places)When competing, each firm will produceunits of output.In tum, each firm will earn profit of $.What would be the equilibrium quantity if Texas Air had constant marginal and average costs of $10 and American had corntant marginal and average costs of S407It Texas Air had constant marginal and average costs of $10 and American had constant marginal and average costs of S40, American would produceunits and Texas Air Corp.would produce units.In tum, American's will eam profit of $and Texas Air Corp. will earn profit of sAssuming that both firms have the original cost function, C(q) = 40g. how much should Tiexas Air be wiling to invest to lower es marginal cost from 40 to 10, assuming that Americanwill not follow suit?Texas Air Corp. would be willing to invest $

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Suppose the arline industry consisted of only two firms American and Texas Air Corp Let the two fiems have identical cost functions, C 40g Assume that the demand curve for the industry is given by P190-Q and that each firm expects the other to behave as a Cournot compeotor Calculate the Coumot-Nash equilibrium for each firm, assuming that each chooses the output level that maximizes as profes when taking its rival's output as given. What are the profits of each fem? (Round all quantities and dollar amounts to hwo decimal places) When competing, each firm will produce units of output In tum, each firm will earn profit of S What would be the equilibrium quartity if Texas Air had constant marginal and average costs of $10 and American had contart marginal and average costs of 5407

Suppose the arline industry consisted of only two firms American and Texas Air Corp Let the two fiems have identical cost functions, C 40g Assume that the demand curve for the industry is given by P190-Q and that each firm expects the other to behave as a Cournot compeotor Calculate the Coumot-Nash equilibrium for each firm, assuming that each chooses the output level that maximizes as profes when taking its rival's output as given. What are the profits of each fem? (Round all quantities and dollar amounts to hwo decimal places) When competing, each firm will produce units of output In tum, each firm will earn profit of S What would be the equilibrium quartity if Texas Air had constant marginal and average costs of $10 and American had contart marginal and average costs of 5407

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.3P

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