Firm 2 compete by choosing quantities multaneously (Cournot oligopoly with identical products). Find the price, quantity, and profit of each firm in equilibrium. Which of the following alternatives is correct? (a) P₁ = P₂ = $220, 9₁ 92 = 22.5, and ₁ = ₂ = $4,050 = (b) p₁ = $160, p₂ = $220, q₁ = 60,9₂ = 0,₁ = $7,200, and ₂ = $0 (c) P₁ = P₂ = $160, 9₁ 92 = 30, and ₁ = 7₂ = $3,600 (d) P₁ P₂ = $40, 9₁ = 9₂ = 45, and ₁ = ₂ = $0
Firm 2 compete by choosing quantities multaneously (Cournot oligopoly with identical products). Find the price, quantity, and profit of each firm in equilibrium. Which of the following alternatives is correct? (a) P₁ = P₂ = $220, 9₁ 92 = 22.5, and ₁ = ₂ = $4,050 = (b) p₁ = $160, p₂ = $220, q₁ = 60,9₂ = 0,₁ = $7,200, and ₂ = $0 (c) P₁ = P₂ = $160, 9₁ 92 = 30, and ₁ = 7₂ = $3,600 (d) P₁ P₂ = $40, 9₁ = 9₂ = 45, and ₁ = ₂ = $0
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Consider a market with two firms (Firm 1 and Firm 2), which produce an identical good.
Both firms have the same constant marginal cost: MC = m = 40.
The demand in this market is given by:
Q = 100.25p ⇒ p = 400 - 4Q
Let p₁, 9₁, and ₁ denote the price charged by firm 1, the quantity firm 1 produces and sells, and
firm 1's profits, respectively. Analogously, let p₂, 92, and ₂ denote the price, quantity, and
profits of firm 2.
When appropriate, assume the firms split total quantity and profits evenly.
Transcribed Image Text:Assume Firm 1 and Firm 2 compete by choosing quantities simultaneously (Cournot oligopoly
with identical products). Find the price, quantity, and profit of each firm in equilibrium. Which of
the following alternatives is correct?
(a) P₁ = P₂ = $220, q1 q2 = 22.5, and ₁ = ₂ = $4,050
(b) p₁ = $160, p₂ = $220,q₁ = 60,9₂ = 0,₁ = $7,200, and ₂ = $0
(c) P₁ = P₂ = $160, 9₁ 92 = 30, and ₁ = ₂ = $3,600
=
(d) P₁ = P₂ = $40,9₁ = 9₂ = 45, and ₁ = ₂ = $0
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