1. Two companies (A and B) are duopolists that produce identical products. Demand for the products is given by the following demand function: P = 10,000 - 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 = 500,000 + 200QA + .5QA² TC8 = 200,000 + 400QB +QB² Assume that the two firms act independently as in the Cournot model (that is, each firm assumes that the other firm's output will not change). Determine the long-run equilibrium output and selling price for each firm.

1. Two companies (A and B) are duopolists that produce identical products. Demand for the products is given by the following demand function: P = 10,000 - 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 = 500,000 + 200QA + .5QA² TC8 = 200,000 + 400QB +QB² Assume that the two firms act independently as in the Cournot model (that is, each firm assumes that the other firm's output will not change). Determine the long-run equilibrium output and selling price for each firm.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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