Tom is a monopolist input supplier to Dic and Harry. Tom's marginal cost is 1. Dic and Harry are duopolists with production function q = x1/2 . No firm has fixed costs. The demand for the final product is given by Q = 100 – p. a) Assume Dic and Harry buy the input from Tom at price k. What are their cost functions? b) Find the Cournot equilibrium quantities. c) What price, k, should Tom set?

Tom is a monopolist input supplier to Dic and Harry. Tom's marginal cost is 1. Dic and Harry are duopolists with production function q = x1/2 . No firm has fixed costs. The demand for the final product is given by Q = 100 – p. a) Assume Dic and Harry buy the input from Tom at price k. What are their cost functions? b) Find the Cournot equilibrium quantities. c) What price, k, should Tom set?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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