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Could you tell me how to solve this question (a,b,c) step-by-step? QUESTION 12 A homogeneous products duopoly faces a market demand function given by where
Could you tell me how to solve this question (a,b,c) step-by-step?
QUESTION 12 A homogeneous products duopoly faces a market demand function given by where Q = QI + Q2 and a>100 and b=l. Both firms have constant marginal costs There are no fixed costs. a) Derive the equation of each firm reaction function and provide a graphical [8 marks] explanation to comment your results b) What is the Cournot equilibrium quantity per firm and price in this market? c) i) ii) iii) 14 marks) What would be the equilibrium price and quantity if the market were served by perfectly competitive firms that faced the same cost and demand functions of the Coumot duopolists? [4 marks] What would be the equilibrium price and quantity if the market were served by a monopolist that faced the same cost and demand functions of the Cournot duopolists? [4 marks] Compare the equilibria found in (b), (c.i) and (c.ii) and comment. [5 marks) QUESTION 12 A homogeneous products duopoly faces a market demand function given by where Q = QI + Q2 and a>100 and b=l. Both firms have constant marginal costs There are no fixed costs. a) Derive the equation of each firm reaction function and provide a graphical [8 marks] explanation to comment your results b) What is the Cournot equilibrium quantity per firm and price in this market? c) i) ii) iii) 14 marks) What would be the equilibrium price and quantity if the market were served by perfectly competitive firms that faced the same cost and demand functions of the Coumot duopolists? [4 marks] What would be the equilibrium price and quantity if the market were served by a monopolist that faced the same cost and demand functions of the Cournot duopolists? [4 marks] Compare the equilibria found in (b), (c.i) and (c.ii) and comment. [5 marks)
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