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Use the same demand function as, QD(p)=500-250p. Suppose now that each firm has a constant marginal cost equal to 1. a. If there are

 

Use the same demand function as, QD(p)=500-250p. Suppose now that each firm has a constant marginal cost equal to 1. a. If there are n identical firms, what would be the profit of each under Cournot competition? b. What would be the profit of each if they collide? c. If the firms face that demand function each period, what discount factor is required to support collusion? d. What happens to the required discount factor as n grows?

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