Question
In the Cournot model of quantity competition, duopolists compete for a market where demand is described by P = 120 - Q. Here, Q =
In the Cournot model of quantity competition, duopolists compete for a market where demand is described by P = 120 - Q. Here, Q = Q1 + Q2 denotes total output. For each firm, MC = AC = 30.
a. Find the equilibrium output of the firms, the resulting market price, and the firm's profits.
b. Suppose the firms decide to form a cartel. Determine the optimal total output of the cartel and the cartel's total profit. Is the cartel advantageous for the firm?
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Basic Economics
Authors: Frank V. Mastrianna
16th edition
1111826641, 978-0357706664, 978-1111826642
