3. Assume that two companies (C and D) are duopolists that produce identical products. Demand for the products is given by the following linear demand function: P = 600 – Qc – Q. where Qc and Qp are the quantities sold by the respective firms and P is the selling price. The total cost functions for the two companies are = 25,000 + 100QC = 20,000 + 100QD TCC %3D TCD %3D Assume that the firms form act independently as in the Count model (i.e., each firm assumes that the other firm's output will not change). а. Determine the long-run equilibrium output and selling price for each firm. b. Determine that total profits for each firm at the equilibrium output found in Part (a).
3. Assume that two companies (C and D) are duopolists that produce identical products. Demand for the products is given by the following linear demand function: P = 600 – Qc – Q. where Qc and Qp are the quantities sold by the respective firms and P is the selling price. The total cost functions for the two companies are = 25,000 + 100QC = 20,000 + 100QD TCC %3D TCD %3D Assume that the firms form act independently as in the Count model (i.e., each firm assumes that the other firm's output will not change). а. Determine the long-run equilibrium output and selling price for each firm. b. Determine that total profits for each firm at the equilibrium output found in Part (a).
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:3. Assume that two companies (C and D) are duopolists that produce identical products.
Demand for the products is given by the following linear demand function:
P = 600 – Qc - QD
where Qc and Qp are the quantities sold by the respective firms and P is the selling
price. The total cost functions for the two companies are
TCC
25,000 + 100Qc
%3D
TCp = 20,000 + 100QD
Assume that the firms form act independently as in the Count model (i.e., each firm
assumes that the other firm's output will not change).
а.
Determine the long-run equilibrium output and selling price for each firm.
b.
Determine that total profits for each firm at the equilibrium output found in Part (a).
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