The market demand curve faced by Cournot duopolistsis: Qd = 400 - 8P where Qd is the market quantity demanded and P is the commodity's price in dollars. a. Firm A has a constant marignal cost of $10. What is the equation for Firm A's reaction function with qa expressed as a function of qb? b. Firm B has a constant marginal cost of $7.50. What is the equation for Firm B's reaction function with qb expressed as a function of qa? c. What quantity of output will each firm produce in equilibrium? What price will be established for the commodity?
The market demand curve faced by Cournot duopolistsis: Qd = 400 - 8P where Qd is the market quantity demanded and P is the commodity's price in dollars. a. Firm A has a constant marignal cost of $10. What is the equation for Firm A's reaction function with qa expressed as a function of qb? b. Firm B has a constant marginal cost of $7.50. What is the equation for Firm B's reaction function with qb expressed as a function of qa? c. What quantity of output will each firm produce in equilibrium? What price will be established for the commodity?
Chapter15: Imperfect Competition
Section: Chapter Questions
Problem 15.3P
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The market demand curve faced by Cournot duopolistsis:
Qd = 400 - 8P
where Qd is the market quantity demanded and P is the commodity's price in dollars.
a. Firm A has a constant marignal cost of $10. What is the equation for Firm A's reaction function with qa expressed as a function of qb?
b. Firm B has a constant marginal cost of $7.50. What is the equation for Firm B's reaction function with qb expressed as a function of qa?
c. What quantity of output will each firm produce in equilibrium? What price will be established for the commodity?
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