question a b c Consider a duopoly market with 2 firms. Aggregate demand in this market is given byeQ = 500 – P,-where P is the price on the market. Q is total market output, i.e., Q = QA + QB, whereQA is the output by Firm A and QB is the output by Firm B. For both firms, marginal costis given by MC = 20, i=A.B. -Assume the firms compete a la Cournot. ea) Find the inverse demand in this market.Note that marginal revenue for both firms is given by -MRA=500-2QA-QB,MRB=500-QA-2QB.b) Describe what a best-response curve is and how to find it.c) Derive the best-response function for each firm.d) What are the equilibrium quantities?e) What is the total quantity supplied on this market?) What is the equilibrium price in this market?1 1 1 1 1

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Consider a duopoly market with 2 firms. Aggregate demand in this market is given by- Q = 500 – P,- where P is the price on the market. Q is total market output, i.e., Q = QA + QB, where QA is the output by Firm A and QB is the output by Firm B. For both firms, marginal cost is given by MG = 20, i=A.B. « Assume the firms compete a la Cournot. e a) Find the inverse demand in this market.

Consider a duopoly market with 2 firms. Aggregate demand in this market is given by- Q = 500 – P,- where P is the price on the market. Q is total market output, i.e., Q = QA + QB, where QA is the output by Firm A and QB is the output by Firm B. For both firms, marginal cost is given by MG = 20, i=A.B. « Assume the firms compete a la Cournot. e a) Find the inverse demand in this market.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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