Analysts have estimated the inverse market demand in a homogeneous-product Cournot duopoly to be P= 150-3 (Q₁ + Q2). They estimate costs to be C₁(Q₁)= 18Q₁ and C₂(Q2) = 30Q2. a. Determine the reaction function for each firm. Firm 1: Q₁ = Firm 2: Q₂ = Firm 2: Q2 b. Calculate each firm's equilibrium output. Firm 1: Q₁ c. Calculate the equilibrium market price. Firm 2: $ d. Calculate the profit each firm earns in equilibrium. Firm 1: $

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Analysts have estimated the inverse market demand in a homogeneous-product Cournot duopoly to be P=150 -3 (Q₁ + Q2).
They estimate costs to be C₁(Q₁)= 18Q1 and C2(Q2) = 30Q2.
a. Determine the reaction function for each firm.
Firm 1: Q₁ =
Firm 2: Q2 =
Q₂2
b. Calculate each firm's equilibrium output.
Firm 1:
Firm 2:
c. Calculate the equilibrium market price.
$
d. Calculate the profit each firm earns in equilibrium.
Firm 1: $
Firm 2: $
Transcribed Image Text:Analysts have estimated the inverse market demand in a homogeneous-product Cournot duopoly to be P=150 -3 (Q₁ + Q2). They estimate costs to be C₁(Q₁)= 18Q1 and C2(Q2) = 30Q2. a. Determine the reaction function for each firm. Firm 1: Q₁ = Firm 2: Q2 = Q₂2 b. Calculate each firm's equilibrium output. Firm 1: Firm 2: c. Calculate the equilibrium market price. $ d. Calculate the profit each firm earns in equilibrium. Firm 1: $ Firm 2: $
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