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: $
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: $
Chapter15: Imperfect Competition
Section: Chapter Questions
Problem 15.4P
Related questions
Question
100%
![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: $](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbdff81e6-f80c-4f1e-ad1c-b85c7e5a23de%2F1b6643bd-0665-4026-97a9-5a83ac64d360%2Fwe94cn69_processed.jpeg&w=3840&q=75)
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: $
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 6 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
![Survey Of Economics](https://www.bartleby.com/isbn_cover_images/9781337111522/9781337111522_smallCoverImage.gif)
![Micro Economics For Today](https://www.bartleby.com/isbn_cover_images/9781337613064/9781337613064_smallCoverImage.gif)
![Survey Of Economics](https://www.bartleby.com/isbn_cover_images/9781337111522/9781337111522_smallCoverImage.gif)
![Micro Economics For Today](https://www.bartleby.com/isbn_cover_images/9781337613064/9781337613064_smallCoverImage.gif)
![Economics For Today](https://www.bartleby.com/isbn_cover_images/9781337613040/9781337613040_smallCoverImage.gif)
![Survey of Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781305260948/9781305260948_smallCoverImage.gif)
Survey of Economics (MindTap Course List)
Economics
ISBN:
9781305260948
Author:
Irvin B. Tucker
Publisher:
Cengage Learning
![Managerial Economics: Applications, Strategies an…](https://www.bartleby.com/isbn_cover_images/9781305506381/9781305506381_smallCoverImage.gif)
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning