Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The inverse demand for tea is given by P = 8- 0.04 Q , where P is the price per a gram of tea and

The inverse demand for tea is given byP= 8- 0.04Q, wherePis the price per a gram of tea andQis the total number of grams of tea brought to market. There are two tea shops in the market. Shop 1's cost function is given byC1=0.01q1^2, whereq1is the number of grams of tea it brings to market. Shop 2's cost function is given byC2=0.01q2^2, whereq2is the number of grams of teait brings to market. Given that the two shops compete by setting output (Cournot), answer the following.

what isthe equilibrium output level of each shop and the equilibrium per gram price for tea. Shop 1 will produce______grams of tea and shop 2 will produce________grams of tea. The equilibrium market price is ________

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Essentials Of Business Law

Authors: Jeffrey F Beatty, Susan S Samuelson

3rd Edition

0324537123, 9780324537123

More Books

Students also viewed these Economics questions

Question

1. Avoid reading cumulative folders early in the year.

Answered: 1 week ago