Suppose that firms' marginal and average costs are constant and equal to c and that inverse market demand is given by P = a – bQ, where a, b> 0. a. Calculate the profit-maximizing price-quantity combi- nation for a monopolist. Also calculate the monopolist's profit. b. Calculate the Nash equilibrium quantities for Cournot duopolists, which choose quantities for their identical products simultaneously. Also compute market output, market price, and firm and industry profits.

Suppose that firms' marginal and average costs are constant and equal to c and that inverse market demand is given by P = a – bQ, where a, b> 0. a. Calculate the profit-maximizing price-quantity combi- nation for a monopolist. Also calculate the monopolist's profit. b. Calculate the Nash equilibrium quantities for Cournot duopolists, which choose quantities for their identical products simultaneously. Also compute market output, market price, and firm and industry profits.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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