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=1000−QC−QDwhere QC and QD are the quantities sold by the respective firms and P is the selling price. Total cost functions for the two companies areTCC=15,000+50QCTCD=10,000+75QDAssume that the firms act independently as in the Cournot model (i.e., each firm assumes that the other firm’s output will not change). Please, find the equilibrium output of firm C.

Given, TCC=15,000+50QC TCD=10,000+75QD P = 1000 – QC - QDAccording to the question, the it is assumed that the firms acts independently; therefore, 15,000+50Q=10,000+75Q 15,000 - 10,000 = 75Q-50Q 5000 = 25Q Q = 200 So, the output of firm C will be 200.

Answered: Assume that two companies (C and D) are…

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

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Chapter1: Making Economics Decisions

Section: Chapter Questions

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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=1000−QC−QD
where QC and QD are the quantities sold by the respective firms and P is the selling price. Total cost functions for the two companies are

TCC=15,000+50QC
TCD=10,000+75QD

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). Please, find the equilibrium output of firm C.

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