Problem 5.1. The inverse market demand for printer paper is given by P = 400 – 2Q. There are two firmswho compete to produce this paper, each with a marginal cost of production equal to c = 40 over a largerange of output (ie, assume constant marginal cost). The two firms compete in quantities, in other wordsthey each simultaneously choose a quantity to produce (Cournot competition).Derive the Cournot-Nash equilibrium of this game. Please write final answers in the boxes, showing work inblank areas.(a) The reaction function for each firm.91 (92):92 (91)(b) Optimal output q for each firm.92=р==π1 =(c) Market price (from demand curve).(d) Firm profits.92=π2 =

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Problem 5.1. The inverse market demand for printer paper is given by P = 400 - 2Q. There are two who compete to produce this paper, each with a marginal cost of production equal to c = 40 over a range of output (ie, assume constant marginal cost). The two firms compete in quantities, in other w they each simultaneously choose a quantity to produce (Cournot competition). Derive the Cournot-Nash equilibrium of this game. Please write final answers in the boxes, showing wo blank areas. (a) The reaction function for each firm. 91 (92) = 92 (91) (b) Optimal output q for each firm. 92 = = P = 92 = (c) Market price (from demand curve).

Problem 5.1. The inverse market demand for printer paper is given by P = 400 - 2Q. There are two who compete to produce this paper, each with a marginal cost of production equal to c = 40 over a range of output (ie, assume constant marginal cost). The two firms compete in quantities, in other w they each simultaneously choose a quantity to produce (Cournot competition). Derive the Cournot-Nash equilibrium of this game. Please write final answers in the boxes, showing wo blank areas. (a) The reaction function for each firm. 91 (92) = 92 (91) (b) Optimal output q for each firm. 92 = = P = 92 = (c) Market price (from demand curve).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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