Suppose that two duopolists (firm A and Firm B) produce identical products. The firms face the following market demand curve P=1250-Q Where Q = Total output in the duopoly market Qa= Firm A’s output Qb = Firm B’s output P = Price in the duopoly market Firm A and Firm B make output decisions sequentially. Firm A is the leading firm that makes the first move, and firm B is the following firm.
Suppose that two duopolists (firm A and Firm B) produce identical products. The firms face the following market demand curve
P=1250-Q
Where Q = Total output in the duopoly market
Qa= Firm A’s output
Qb = Firm B’s output
P = Price in the duopoly market
Firm A and Firm B make output decisions sequentially. Firm A is the leading firm that makes the first move, and firm B is the following firm.
Firm A rationally anticipates the output reaction of Firm B, as Firm A has the prior knowledge of Firm B’s output-reaction curve, which is Qb = 600-0.5Qa
It is assumed that firm B always acts in the same manner.
Both firms have constant marginal costs (MC) of production where MCa=MCb=$50.
Fixed Costs are nil because expenses have already been fully amortised
In this duopoly market, equilibrium level of output is __________, and equilibrium level of price is ___________
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