QUESTION 1B. Continuing with the inverse demand, P = 50 - Q, if each firm has a marginal cost of 0, what is the difference between the equilibrium price under Cournot competition and under Bertrand competition?
QUESTION 1B. Continuing with the inverse demand, P = 50 - Q, if each firm has a marginal cost of 0, what is the difference between the equilibrium price under Cournot competition and under Bertrand competition?
Chapter15: Imperfect Competition
Section: Chapter Questions
Problem 15.8P
Related questions
Question
![QUESTION 1A) Two cournot competitors face
inverse demand P = 50 - Q. Where, Q = q1+q2, is
the total output of firms 1 and 2. What are the
equilibrium output levels for q1 and q2, If firm 1
marginal cost is 1, and firm 2's marginal cost is 12?
QUESTION 1B. Continuing with the inverse
demand, P = 50 - Q, if each firm has a marginal
cost of 0, what is the difference between the
equilibrium price under Cournot competition and
under Bertrand competition?
b.
C.
d.
a.
The Cournot price is higher than the
Bertrand price by 50.
The Cournot price is lower than the
Bertrand price by 25.
The Cournot price is higher than the
Bertrand price by 50/3.
Equilibrium prices under Cournot and
Bertrand are the same, so the
difference is zero.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F23813495-93a1-4335-90c7-8820e532e842%2F8cbb65fa-92de-4b4a-a3e4-079c4b0cf7a3%2Fv1zjdnd_processed.jpeg&w=3840&q=75)
Transcribed Image Text:QUESTION 1A) Two cournot competitors face
inverse demand P = 50 - Q. Where, Q = q1+q2, is
the total output of firms 1 and 2. What are the
equilibrium output levels for q1 and q2, If firm 1
marginal cost is 1, and firm 2's marginal cost is 12?
QUESTION 1B. Continuing with the inverse
demand, P = 50 - Q, if each firm has a marginal
cost of 0, what is the difference between the
equilibrium price under Cournot competition and
under Bertrand competition?
b.
C.
d.
a.
The Cournot price is higher than the
Bertrand price by 50.
The Cournot price is lower than the
Bertrand price by 25.
The Cournot price is higher than the
Bertrand price by 50/3.
Equilibrium prices under Cournot and
Bertrand are the same, so the
difference is zero.
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