Page 1 of 1
Assume that two companies (A and B) are duopolists who produce identical products. Demand for the products is given by t
Posted: Wed Jul 06, 2022 6:34 pm
by answerhappygod
- Assume That Two Companies A And B Are Duopolists Who Produce Identical Products Demand For The Products Is Given By T 1 (39.86 KiB) Viewed 32 times
Assume that two companies (A and B) are duopolists who produce identical products. Demand for the products is given by the following linear demand function: P = 400-QA - QB where QA and QB are the quantities sold by the respective firms and P is the selling price. Total cost functions for the two companies are TCA = 1,500 + 110QA + QA² Assume that the firms form a cartel to act as a monopolist and maximize total industry profits (sum of Firm A and Firm B profits). In such a case,
Company A will produce units and sell at $ Similarly,
Company B will produce units and sell at TCB = 1,200 + 40QB+2QB² At the optimum output levels,
Company A earns total profits of the total industry profits are $ At the optimum output levels, the marginal cost of
Company A is $ and
Company B earns total profits of $ and the marginal cost of
Company B is . Therefore,