Assume that two companies (C and D) are duopolists that produce identical products. Demand for the products is given by the following linear demand function:

P=1,200QCQDP=1,200QCQD

where QCQC and QDQD are the quantities sold by the respective firms and P is the selling price. Total cost functions for the two companies are

TCC=25,000+200QCTCC=25,000+200QC

TCD=20,000+250QDTCD=20,000+250QD

Assume that the firms act independently as in the Cournot model (i.e., each firm assumes that the other firms output will not change).

For Company C, the long-run equilibrium output is

, and the selling price is

.For Company D, the long-run equilibrium output is

, and the selling price is

.

At the equilibrium output, Company C earns total profits of

, and Company D earns total profits of

.