Suppose two firms, Firm A and Firm B, are competing by setting quantities (Cournot competition). Firm A has a constant marginal cost of $10 per unit; Firm B has a constant marginal cost of $15 per unit. Assume fixed costs are equal to 0 for both firms. Hint: since fixed costs are zero and the marginal cost is constant, MC = AC. The two firms choose between producing 50 units or 100 units. If the total output is 100 units, the price is $20 per unit; if total output is 150 units, the price is $15 per unit; if total output is 200 units, the price is $10 per unit.  Based on the information provided, fill in the firms’ profits in the payoff matrix below with Firm A choosing the row and Firm B choosing the column.      QB=100   QB=50

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Suppose two firms, Firm A and Firm B, are competing by setting quantities (Cournot competition). Firm A has a constant marginal cost of $10 per unit; Firm B has a constant marginal cost of $15 per unit. Assume fixed costs are equal to 0 for both firms. Hint: since fixed costs are zero and the marginal cost is constant, MC = AC.

The two firms choose between producing 50 units or 100 units. If the total output is 100 units, the price is $20 per unit; if total output is 150 units, the price is $15 per unit; if total output is 200 units, the price is $10 per unit. 

Based on the information provided, fill in the firms’ profits in the payoff matrix below with Firm A choosing the row and Firm B choosing the column. 

 

  QB=100   QB=50  
QA=100   ,   ,
QA=50   ,   ,


The resulting equilibrium is for Firm A to produce ____ (50 or 100)units and Firm B to produce_____ (50 or 100) units. 

Suppose two firms, Firm A and Firm B, are competing by setting quantities (Cournot competition). Firm A has a
constant marginal cost of $10 per unit; Firm B has a constant marginal cost of $15 per unit. Assume fixed costs are
equal to 0 for both firms. Hint: since fixed costs are zero and the marginal cost is constant, MC = AC.
The two firms choose between producing 50 units or 100 units. If the total output is 100 units, the price is $20 per
unit; if total output is 150 units, the price is $15 per unit; if total output is 200 units, the price is $10 per unit.
Based on the information provided, fill in the firms' profits in the payoff matrix below with Firm A choosing the row
and Firm B choosing the column.
QB=100
QA=100
QA=50
QB=50
The resulting equilibrium is for Firm A to produce
◆ units and Firm B to produce
◆ units.
Transcribed Image Text:Suppose two firms, Firm A and Firm B, are competing by setting quantities (Cournot competition). Firm A has a constant marginal cost of $10 per unit; Firm B has a constant marginal cost of $15 per unit. Assume fixed costs are equal to 0 for both firms. Hint: since fixed costs are zero and the marginal cost is constant, MC = AC. The two firms choose between producing 50 units or 100 units. If the total output is 100 units, the price is $20 per unit; if total output is 150 units, the price is $15 per unit; if total output is 200 units, the price is $10 per unit. Based on the information provided, fill in the firms' profits in the payoff matrix below with Firm A choosing the row and Firm B choosing the column. QB=100 QA=100 QA=50 QB=50 The resulting equilibrium is for Firm A to produce ◆ units and Firm B to produce ◆ units.
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