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please help me solve this. 3. Consider the following variant of the Cournot Model: Two rms simultaneously choose how much to produce and sell on
please help me solve this.
3. Consider the following variant of the Cournot Model: Two rms simultaneously choose how much to produce and sell on the market. The inverse demand is given by P (Q) = 500 5Q. Firm 1 has a marginal cost cl = 10 and rm 2 has a marginal cost 82 = 15. a. Find the CournotNash Equilibrium quantities of this game. How much prot is each rm making in equilibrium? (5 pts) b. Suppose that rm 2 could invest in a new technology that reduced its unit cost to 02 = 5 (rm 1's costs are the same). Find the new CournotNash Equilibrium quantities of this game. How much would rm 2 be willing to pay for this technology? (10 pts)Step by Step Solution
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