The inverse market demand in a homogeneous- product Cournot duopoly is P = 200 3(Q1 +

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The inverse market demand in a homogeneous- product Cournot duopoly is P = 200 – 3(Q1 + Q2) and costs are C1(Q1) = 26Q1 and C2( Q2) = 32Q2.

a. Determine the reaction function for each firm.

b. Calculate each firm’s equilibrium output.

c. Calculate the equilibrium market price.

d. Calculate the profit each firm earns in equilibrium.

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Managerial Economics and Business Strategy

ISBN: 978-0073523224

8th edition

Authors: Michael Baye, Jeff Prince

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Question Posted: Apr 18, 2014 09:04 AM

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The inverse market demand in a homogeneous- product Cournot duopoly is P = 200 3(Q1 +

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a and b Q 1 20 Q 2 18 ...View the full answer

Managerial Economics and Business Strategy

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