Exercise 12.1
Assume that two companies (C and D) are duopolists that produce identical products. Demand for the products is given by the following linear demand function:
P=600−QC−QDP=600−QC−QD
where QCQC and QDQD are the quantities sold by the respective firms and P is the selling price. Total cost functions for the two companies are
TCC=25,000+100QCTCC=25,000+100QC
TCD=20,000+125QDTCD=20,000+125QD
Assume that the firms act independently as in the Cournot model (i.e., each firm assumes that the other firm’s output will not change).
For Company C, the long-run equilibrium output is- , and the selling price is.
For Company D, the long-run equilibrium output is- , and the selling price is.
At the equilibrium output, Company C earns total profits of, and Company D earns total profits of.
Exercise 12.1 Assume that two companies (C and D) are duopolists that produce identical products. Demand...
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