The market demand in a homogeneous-product Cournot duopoly is P = 200 – 3(Q1 + Q2) and costs are C1(Q1) = 26Q1 and C2(Q2) = 32Q2. Instructions: Use one decimal for part a. a. Determine the reaction function for each firm. Firm 1: Q1 = + Q2 Firm 2: Q2 = + Q1 Instructions: Use no decimals. Do not round values if used to complete other calculations. Use commas (30,000 instead of 30000) b. Q1 = and Q2 = c. P = $ d. Profits Firm 1 = $ and profits Firm 2 = $
The market demand in a homogeneous-product Cournot duopoly is P = 200 – 3(Q1 + Q2) and costs are C1(Q1) = 26Q1 and C2(Q2) = 32Q2.
Instructions: Use one decimal for part a.
a. Determine the reaction function for each firm.
Firm 1: Q1 = + Q2
Firm 2: Q2 = + Q1
Instructions: Use no decimals. Do not round values if used to complete other calculations. Use commas (30,000 instead of 30000)
b. Q1 = and Q2 =
c. P = $
d. Profits Firm 1 = $ and profits Firm 2 = $
e. If Firm 1 instead produces Q1 = 24, the optimal Q2 = , and market P = $
f. If one of the firms supply Q > Q-Duopoly, the best strategy for the other firm is to supply:
A. Q-BRF, and continue with this strategy all the times in which Q > Q-Duopoly.
B. Q-BRF, and after this one time, then supply Q-Duopoly.
C. also Q > Q-Duopoly from now on.
D. also Q > Q-Duopoly one time, then supply Q-Duopoly.
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