An industry has two firms. Firm 1's cost function is c(y) = 3y + 200 and firm 2's cost function is c(y) 3y + 100. The demand curve for the output of this industry is a downward-sloping straight line. In a Cournot equilibrium, where both firms produce positive amounts of output: = The firm with higher fixed costs produces more. Both firms produce the same amount of output. There is less output than there would be if the firms colluded to maximize joint profits. It is not possible to tell because the demand function is not specified. The firm with lower fixed costs produces more.

An industry has two firms. Firm 1's cost function is c(y) = 3y + 200 and firm 2's cost function is c(y) 3y + 100. The demand curve for the output of this industry is a downward-sloping straight line. In a Cournot equilibrium, where both firms produce positive amounts of output: = The firm with higher fixed costs produces more. Both firms produce the same amount of output. There is less output than there would be if the firms colluded to maximize joint profits. It is not possible to tell because the demand function is not specified. The firm with lower fixed costs produces more.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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