Question: Can someone please answer this question asap? Thank you 1 12 points Assume that two firms compete in an industry, both with constant marginal cost
Can someone please answer this question asap? Thank you

1 12 points Assume that two firms compete in an industry, both with constant marginal cost and average cost of $ 10. Assume the market inverse demand curve is P = 250 - Q where the market output Q is the sum of all firms' individual outputs, i.e., Q = q1 + q2. Assume that two firms compete in quantities and will interact indefinitely in the market. Suppose that the CEOs of firms 1 and 2 meet one year at the Swan Ball and have an opportunity to chat about the competitive conditions in their industry. They decide that they should not behave so aggressively toward one another; instead, they agree that each of them should produce one-half of the monopoly output. The next morning, each CEO gets up and contemplates whether he or she should fulfill the agreement. Calculate each firm's single round profit per firm if they do not reach a collusive agreement and continue competing as Cournot duopolists (or if both violate the agreement). Calculate each firm's single round profit per firm if they reach a collusive agreement (or if both stick to the agreement). Calculate each firm's single round profit for the firm that cheats. Each firm's single round profit per firm if they do not reach a collusive agreement and continue competing as Cournot duopolists is $ type your answer.. Each firm's single round profit per firm if they reach a collusive agreement and stick to the agreement is $ type your answer... The single round profit for the firm that cheats is $ type your
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
