ssume that two companies (C and D) are duopolists that produce identical products. Demand for the products is given by the following linear demand function: P=600−QC−QD�=600−��−�� where QC�� and QD�� are the quantities sold by the respective firms and P is the selling price. Total cost functions for the two companies are TCC=25,000+100QCTC�=25,000+100�� TCD=20,000+125QDTC�=20,000+125�� Assume that the firms act independently as in the Cournot model (i.e., each firm assumes that the other firm’s output will not change). For Company C, the long-run equilibrium output is , and the selling price is . For Company D, the long-run equilibrium output is , and the selling price is . At the equilibrium output, Company C earns total profits of , and Company D earns total profits of
ssume that two companies (C and D) are duopolists that produce identical products. Demand for the products is given by the following linear demand function: P=600−QC−QD�=600−��−�� where QC�� and QD�� are the quantities sold by the respective firms and P is the selling price. Total cost functions for the two companies are TCC=25,000+100QCTC�=25,000+100�� TCD=20,000+125QDTC�=20,000+125�� Assume that the firms act independently as in the Cournot model (i.e., each firm assumes that the other firm’s output will not change). For Company C, the long-run equilibrium output is , and the selling price is . For Company D, the long-run equilibrium output is , and the selling price is . At the equilibrium output, Company C earns total profits of , and Company D earns total profits of
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Assume that two companies (C and D) are duopolists that produce identical products. Demand for the products is given by the following linear demand function:
P=600−QC−QD�=600−��−��
where QC�� and QD�� are the quantities sold by the respective firms and P is the selling price . Total cost functions for the two companies are
TCC=25,000+100QCTC�=25,000+100��
TCD=20,000+125QDTC�=20,000+125��
Assume that the firms act independently as in the Cournot model (i.e., each firm assumes that the other firm’s output will not change).
For Company C, the long-run equilibrium output is
, and the selling price is
.
For Company D, the long-run equilibrium output is
, and the selling price is
.
At the equilibrium output, Company C earns total profits of
, and Company D earns total profits of
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