1. The market demand curve for mineral water is given by P = 15 - Q. If there are two firms that produce mineral water, each with a constant marginal cost of 3 per unit, fill in the entries for each of the four duopoly models indicated in the table. (In the Stackelberg model, assume that firm 1 is the leader.) (LO2) HI
1. The market demand curve for mineral water is given by P = 15 - Q. If there are two firms that produce mineral water, each with a constant marginal cost of 3 per unit, fill in the entries for each of the four duopoly models indicated in the table. (In the Stackelberg model, assume that firm 1 is the leader.) (LO2) HI
Chapter1: Making Economics Decisions
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Transcribed Image Text:1. The market demand curve for mineral water is given by P = 15 - Q. If there
are two firms that produce mineral water, each with a constant marginal cost
of 3 per unit, fill in the entries for each of the four duopoly models indicated in
the table. (In the Stackelberg model, assume that firm 1 is the leader.) (LO2)
II, II₂ II, + II₂
Q₁ Q₂ Q₁ + Q₂
Model
Shared monopoly
Cournot
Bertrand
Stackelberg
P
2. The market demand curve for a pair of Cournot duopolists is given as P = 36-
3Q, where Q = Q₁ + Q₂. The constant per unit marginal cost is 18 for each
duopolist. Find the Cournot equilibrium price, quantity, and profits. (LO2)
3. Solve the preceding problem for Bertrand duopolists. (LO2)
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