Consider a market for energy drinks consisting of only one firm. The firm has a linear cost function: C(q)=4q, where q represents quantity produced by the firm. The market inverse demand function is given byr P(Q)=24-2Q, where Q represents total industry output. Based on the given information answer the following. a. Now suppose a second firm enters the market. The second firm has an identical cost function. What will be the Cournot equilibrium output for each firm? b. Whay is the Stackelberg equilibrium output for each firm of firm 2 enters second? How much profit will each firm make in yhe Cournot game? How much in Stackelberg? c. Which type of market do consumers prefer: monopoly, Cournot duopoly or Stackelberg duopoly?
Consider a market for energy drinks consisting of only one firm. The firm has a linear cost function: C(q)=4q, where q represents quantity produced by the firm. The market inverse
a. Now suppose a second firm enters the market. The second firm has an identical cost function. What will be the Cournot equilibrium output for each firm?
b. Whay is the Stackelberg equilibrium output for each firm of firm 2 enters second? How much profit will each firm make in yhe Cournot game? How much in Stackelberg?
c. Which type of market do consumers prefer:
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