10. In a duopoly market, the firms A and B face the inverse demand function P = 20 - Q. The cost function of the firms are as follows: Firm A: C(QA) = 10 + 8QA; Firm B: C(QB) = 20 + 8QB. A) Calculate the outputs, the equilibrium price and the profit/loss of the firms A and B if they compete in a Cournot (quantity competition) set-up. B) Calculate the outputs, the equilibrium price and the profit/loss of the firms A and B if they compete in a Stackelberg (quantity competition) set-up, where A is the leader and B the follower. C) Calculate the outputs, the equilibrium price and the profit/loss of each firm if they compete in a Bertrand (price competition) set-up.
10. In a duopoly market, the firms A and B face the inverse demand function P = 20 - Q. The cost function of the firms are as follows: Firm A: C(QA) = 10 + 8QA; Firm B: C(QB) = 20 + 8QB. A) Calculate the outputs, the equilibrium price and the profit/loss of the firms A and B if they compete in a Cournot (quantity competition) set-up. B) Calculate the outputs, the equilibrium price and the profit/loss of the firms A and B if they compete in a Stackelberg (quantity competition) set-up, where A is the leader and B the follower. C) Calculate the outputs, the equilibrium price and the profit/loss of each firm if they compete in a Bertrand (price competition) set-up.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:10. In a duopoly market, the firms A and B face the inverse demand function P = 20 - Q. The
cost function of the firms are as follows: Firm A: C(QA) = 10 + 8QA; Firm B: C(QB) = 20 + 8QB.
%3D
%3D
A) Calculate the outputs, the equilibrium price and the profit/loss of the firms A and B if
they compete in a Cournot (quantity competition) set-up.
B) Calculate the outputs, the equilibrium price and the profit/loss of the firms A and B if
they compete in a Stackelberg (quantity competition) set-up, where A is the leader and
B the follower.
C) Calculate the outputs, the equilibrium price and the profit/loss of each firm if they
compete in a Bertrand (price competition) set-up.
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