Your local county's electricity is supplied by two power plants which, due to anti-collusion laws, are forbidden to communicate with each other when deciding what quantity of electricity to generate and how much to charge for it. The price of electricity in the market is given by 340 - 0.03q1 - 0.015q2, where q1 is the amount of electricity sold by generator 1 and q2 is that sold by generator 2. The cost function for generator 1 is 550 + 0.06q1 + 0.0002(q1)^2 The cost function for generator 2 is 600+ 0.04q2 + 0.0004(q2)^2 a) If the two power generators act as a Cournot duopoly, how much electricity will be produced by generator 1? b) How much power will be produced by generator 2? c) What would the market price be?

Your local county's electricity is supplied by two power plants which, due to anti-collusion laws, are forbidden to communicate with each other when deciding what quantity of electricity to generate and how much to charge for it. The price of electricity in the market is given by 340 - 0.03q1 - 0.015q2, where q1 is the amount of electricity sold by generator 1 and q2 is that sold by generator 2. The cost function for generator 1 is 550 + 0.06q1 + 0.0002(q1)^2 The cost function for generator 2 is 600+ 0.04q2 + 0.0004(q2)^2 a) If the two power generators act as a Cournot duopoly, how much electricity will be produced by generator 1? b) How much power will be produced by generator 2? c) What would the market price be?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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