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An incumbent firm, Firm 1, faces a potential entrant, Firm 2, with a lower marginal cost. The market demand curve is p = 130 -
An incumbent firm, Firm 1, faces a potential entrant, Firm 2, with a lower marginal cost. The market demand curve is p = 130 - q1 - 92 Firm 1 has a constant marginal cost of $40 per unit, while Firm 2's is $10. What are the Cournot equilibrium price, quantities, and profits if there is no government intervention? The Cournot equilibrium quantities for Firm 1 (q, ) and Firm 2 (92) are 91 = units and 92 = units. (Enter numeric responses using real numbers rounded to two decimal places.) The Cournot equilibrium price is p = $ Profit for Firm 1 is and profit for Firm 2 is 2 = $To block entry, the incumbent appeals to the government to require that the entrant incur extra costs. What happens to the Cournot equilibrium if the legal requirement causes the marginal cost of the second firm to rise to that of the first firm, $40? The Cournot equilibrium quantities for Firm 1 (q, ) and Firm 2 (92) are 91 = units and 92 = units . The Cournot equilibrium price is p =$. Profit for Firm 1 is my = $ and profit for Firm 2 is 12 = $
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