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Two part practice question: Suppose that the market demand for mountain spring water is given as follows: P = 1200 - Q Mountain spring water

Two part practice question:

Suppose that the market demand for mountain spring water is given as follows:

P = 1200 - Q

Mountain spring water can be produced at no cost, so MC=0.

Suppose that there is only one firm in the market.Marginal revenue for a monopolist is given by MR = 1200 - 2Q.

What is the profit maximizing price in this market?

Now suppose that there are two identical firms in the market for mountain spring water from the previous question.

What level of output would be produced by each firm in a Cournot duopoly?

Marginal revenues are given by

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