Question
Consider a Cournot Duopoly with the following inverse demand function: P = 4,000 - 4Q1 - 4Q2. The firms' marginal costs are identical and are
Consider a Cournot Duopoly with the following inverse demand function: P = 4,000 - 4Q1 - 4Q2. The firms' marginal costs are identical and are given by MCi(Qi) = 120Qi. Based on this information, firm 1 and 2's reaction functions are:
A. r1(Q2) = 288 - 0.5Q1 and r2(Q1) = 288 - 0.5Q2
B. r1(Q2) = 485 - 0.5Q2 and r2(Q1) = 485 - 0.5Q1
C. r1(Q2) = 488 - 0.5Q2 and r2(Q1) = 488 - 0.5Q1
D. r1(Q2) = 33.3 - 0.25Q2 and r2(Q1) = 33.3 - 0.25Q1
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Industrial Relations in Canada
Authors: Fiona McQuarrie
4th Edition
978-1-118-8783, 1118878396, 9781119050599 , 978-1118878392
