Consider a single country and a single good. The demand curve for this good is given by QD = 144 - 4P. There are two firms serving the market: Firm A and Firm B, where Firm A has a marginal cost of $20 and Firm B has a marginal cost of $16. There are no fixed costs incurred by either firm. Firm A produces 16 units and firm B produces 32 units. The equilibrium price is $24. Total Profit for Firm A = $64 Total Profit for Firm B = $256 Assume that these firms compete in Cournot fashion. What is the consumer surplus? Show your work.
Consider a single country and a single good. The demand curve for this good is given by QD = 144 - 4P. There are two firms serving the market: Firm A and Firm B, where Firm A has a marginal cost of $20 and Firm B has a marginal cost of $16. There are no fixed costs incurred by either firm. Firm A produces 16 units and firm B produces 32 units. The equilibrium price is $24. Total Profit for Firm A = $64 Total Profit for Firm B = $256 Assume that these firms compete in Cournot fashion. What is the consumer surplus? Show your work.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Consider a single country and a single good. The demand curve for this good is given by QD = 144 - 4P. There
are two firms serving the market: Firm A and Firm B, where Firm A has a marginal cost of $20 and Firm B has
a marginal cost of $16. There are no fixed costs incurred by either firm.
Firm A produces 16 units and firm B produces 32 units.
The
Total Profit for Firm A = $64
Total Profit for Firm B = $256
Assume that these firms compete in Cournot fashion.
What is the
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