Suppose there are two firms in a market who each simultaneously choose a quantity. Firm 1’s quantity is q1, and Firm 2’
Posted: Sun May 08, 2022 9:11 am
Suppose there are two firms in a market who each simultaneously
choose a quantity. Firm 1’s quantity is q1, and
Firm 2’s quantity is q2. Therefore the market
quantity is Q = q1 + q2. The
market demand curve is given by P = 120 – 5Q. Also, each firm
has constant marginal cost equal to 30. There are no fixed
costs.
The marginal revenue of the two firms are given by:
A) How much output will each firm produce in the Cournot
equilibrium?
B) What will be the market price of the good?
C) What is the deadweight loss that results from this
duopoly?
D) How much profit does each firm make?
E) Suppose Firm 2 produced 10 units of output. How much
output should Firm 1 produce in order to maximize profit?
choose a quantity. Firm 1’s quantity is q1, and
Firm 2’s quantity is q2. Therefore the market
quantity is Q = q1 + q2. The
market demand curve is given by P = 120 – 5Q. Also, each firm
has constant marginal cost equal to 30. There are no fixed
costs.
The marginal revenue of the two firms are given by:
A) How much output will each firm produce in the Cournot
equilibrium?
B) What will be the market price of the good?
C) What is the deadweight loss that results from this
duopoly?
D) How much profit does each firm make?
E) Suppose Firm 2 produced 10 units of output. How much
output should Firm 1 produce in order to maximize profit?