Consider a market that only includes two large firms. The (inverse) market demand is P = 100 – Q. Firm 1 has a cost function of C = 2q1, and firm 2 has a cost function of C2 = 392. %3D Use a Cournot model to calculate the Nash equilibrium outputs q, and q2 of the two firms. (a) Give each firm's profit as a function of and (b) Compute the Nash equilibrium q, and q2.
Consider a market that only includes two large firms. The (inverse) market demand is P = 100 – Q. Firm 1 has a cost function of C = 2q1, and firm 2 has a cost function of C2 = 392. %3D Use a Cournot model to calculate the Nash equilibrium outputs q, and q2 of the two firms. (a) Give each firm's profit as a function of and (b) Compute the Nash equilibrium q, and q2.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Answer:
Given:
Inverse market demand function:
(a).
Profit: it refers to the difference between the total revenue and total cost.
Equation 1 1and equation 2 are the profit functions of firm 1 and firm 2 respectively.
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