Suppose the airline industry consisted of only two firms: American and Texas Air Corp. Let the two firms have identical cost functions, C(q) = 40q. Thus the marginal and average cost for each firm is €40. Assume the demand curve for the industry is given by P = 100 - Q and that each firm expects the other to behave as a Cournot competitor. The price charged by each firm in the Cournot equilbrium is O A. C80 O B. €40 OC. C60 OD. C75

Suppose the airline industry consisted of only two firms: American and Texas Air Corp. Let the two firms have identical cost functions, C(q) = 40q. Thus the marginal and average cost for each firm is €40. Assume the demand curve for the industry is given by P = 100 - Q and that each firm expects the other to behave as a Cournot competitor. The price charged by each firm in the Cournot equilbrium is O A. C80 O B. €40 OC. C60 OD. C75

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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