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 QCQC and QDQD are the quantities sold by the respective firms and P is the selling price. Total cost functions for the two companies are TCc=25,000=100Qc TCd=20,000=125Qd Assume that the firms act independently as in the Cournot model (i.e., each firm assumes that the other firm’s output will not change). For Company C, the long-run equilibrium output is , and the selling price is $ . For Company D, the long-run equilibrium output is , and the selling price is $ . At the equilibrium output, Company C earns total profits of $ , and Company D earns total profits of $ .
Assume that two companies (C and D) are duopolists that produce identical products.
P=600-Qc-Qd
where QCQC and QDQD are the quantities sold by the respective firms and P is the selling price. Total cost functions for the two companies are
TCc=25,000=100Qc TCd=20,000=125Qd
Assume that the firms act independently as in the Cournot model (i.e., each firm assumes that the other firm’s output will not change).
For Company C, the long-run equilibrium output is , and the selling price is $ .
For Company D, the long-run equilibrium output is , and the selling price is $ .
At the equilibrium output, Company C earns total profits of $ , and Company D earns total profits of $ .
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