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The inverse market demand in a homogeneous-product Cournot duopoly is P = 200 - 3( Q 1 + Q 2 ) and costs are C
The inverse market demand in a homogeneous-product Cournot duopoly isP= 200 - 3(Q1+Q2) and costs areC1(Q1) = 26Q1andC2(Q2) = 32Q2.
a. Determine the reaction function for each firm.
Firm 1:Q1=-Q2
Firm 2:Q2=-Q1
b. Calculate each firm's equilibrium output.
Firm 1:
Firm 2:
c. Calculate the equilibrium market price.
$
d. Calculate the profit each firm earns in equilibrium.
Firm 1: $
Firm 2: $
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