Question: = Suppose two firms W and H are competing in a Cournot Duopoly. The reaction function of firm W is given by Qw 40-Q

= Suppose two firms W and H are competing in a Cournot

= Suppose two firms W and H are competing in a Cournot Duopoly. The reaction function of firm W is given by Qw 40-Q and the reaction function of firm H is given by Q = 35-Qw. where Qw and Qu represent the quantity of output produced by firm W and firm H respectively. 1. Determine each firm equilibrium output. 2. Knowing the market inverse demand is P = 75-(Qw+Q) What will be the market price P. 3. Assume that the total cost structures of the firms H and Ware TC = 25Q and TCW = 200w respectively. Determine the profits of each firm

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1 For firm W we have 40Qw35Qw which implies that Qw5 For firm H we have 35530 whi... View full answer

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