Question
Suppose that there are two firms in an industry - firm A and firm B. Suppose that each firm has the same cost function given
Suppose that there are two firms in an industry - firm A and firm B. Suppose that each firm has the same cost function given by: C(y) = 3y. As well, suppose that the market demand function is given by p = 200 4y. (a) Suppose that the two firms behave as perfect competitors. What will be market output and price? How much profit will each firm make? (b) Suppose that the two firms behave as Cournot duopolists. i. () Find the reaction functions of each firm and plot them. ii. Find the Cournot (Nash) equilibrium outputs produced by firm A and firm B. What price is this output sold at?
Can someone provide solution? Thank you
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