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10. In a duopoly market, the firms A and B face the inverse demand function P = 20 Q. The cost function of the firms
10. In a duopoly market, the firms A and B face the inverse demand function P = 20 Q. The cost function of the firms are as follows: Firm A: C(QA) = 10 + SQA; Firm B: C(QB) = 20 + BQB. A) Calculate the outputs, the equilibrium price and the profit/loss of the firms A and B if they compete in a Cournot (quantity competition) set-up. B) Calculate the outputs, the equilibrium price and the profit/loss of the firms A and B if they compete in a Stackelberg (quantity competition) set-u p, where A is the leader and B the follower. C) Calculate the outputs, the equilibrium price and the profit/loss of each firm if they compete in a Bertrand (price competition) setup. D) Suppose that the firms form a cartel and each produces half of the total output. What will be the equilibrium price and the output that each firm produces? Calculate the profit/loss of each firm. E) Calculate the consumer surplus in all four cases and discuss which ofthe above situations - Cournot quantity competition, Stackelberg quantity competition, Bertrand price competition, or a cartel - would be the best for the consumers
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