Now suppose we are back in the world of Cournot with two firms choosing their output levels
Question:
Now suppose we are back in the world of Cournot with two firms choosing their output levels simultaneously. However, this time firm 1 is a low-cost firm with AC1 = MC1 = 160 and firm 2 is a high-cost firm with AC2 = MC2 = 240.
Marginal profit function of firm 1: 3040 - 4Q1 - 2Q2
Marginal profit function of firm 2: 2960 - 2Q1 - 4Q2
What will be the quantity produced by firm 1 in a Cournot duopoly model?
Group of answer choices
560 units
540 units
520 units
500 units
What will be the quantity produced by firm 2 in a Cournot duopoly model?
Group of answer choices
520 units
480 units
460 units
440 units
Can you identify the results we learned from solving this problem on market structure?
Group of answer choices
The monopoly market output is greater than the oligopoly market output and the oligopoly market output is greater than the competitive industry output.
The competitive market output is greater than the oligopoly market output and the oligopoly market output is lower than the monopoly output.
The competitive market output is greater than the oligopoly market output and the oligopoly market output is equal to the monopoly output.
The competitive market output is greater than the oligopoly market output and the oligopoly market output is greater than the monopoly output.
Can you identify which of the following options demonstrates the results you obtained while solving the different duopoly problems above?
Group of answer choices
In a duopoly market, a firm has a competitive advantage over its competitor when it gets to choose its output level first and when its cost is higher than its competitor's cost.
In a duopoly market, a firm has a competitive advantage over its competitor when it gets to choose its output level second and when its cost is lower than its competitor's cost.
In a duopoly market, a firm has a competitive advantage over its competitor when it gets to choose its output level second and when its cost is higher than its competitor's cost.
In a duopoly market, a firm has a competitive advantage over its competitor when it gets to choose its output level first and when its cost is lower than its competitor's cost.
Expert Answer:
