Analysts have estimated the inverse market demand in a homogeneous-product Cournot duopoly to be P = 180 −3 (Q1 + Q2). They estimate costs to be C1(Q1) = 21Q1 and C2(Q2) = 33Q2. a. Determine the reaction function for each firm. Firm 1: Q1 = − Q2 Firm 2: Q2 = − Q1 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: $
Analysts have estimated the inverse market demand in a homogeneous-product Cournot duopoly to be P = 180 −3 (Q1 + Q2). They estimate costs to be C1(Q1) = 21Q1 and C2(Q2) = 33Q2. a. Determine the reaction function for each firm. Firm 1: Q1 = − Q2 Firm 2: Q2 = − Q1 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: $
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Analysts have estimated the inverse market
a. Determine the reaction function for each firm.
Firm 1: Q1 = − Q2
Firm 2: Q2 = − Q1
b. Calculate each firm’s equilibrium output.
Firm 1:
Firm 2:
c. Calculate the
$
d. Calculate the profit each firm earns in equilibrium.
Firm 1: $
Firm 2: $
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