Consider a duopoly in which market demand is P = 40-Q, where P is price per...

 

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Consider a duopoly in which market demand is P = 40-Q, where P is price per unit in dollars and Q is total number of units, Q = Q₁ + Q2, the sum of production by the two firms. Suppose marginal cost is $8 per unit. a) What is firm 1's reaction function? (Remember to show all work for each answer.) b) What is the Cournot solution (Q₁) for each firm? What is the equilibrium market price? Consider a duopoly in which market demand is P = 40-Q, where P is price per unit in dollars and Q is total number of units, Q = Q₁ + Q2, the sum of production by the two firms. Suppose marginal cost is $8 per unit. a) What is firm 1's reaction function? (Remember to show all work for each answer.) b) What is the Cournot solution (Q₁) for each firm? What is the equilibrium market price?

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a Firm Is reaction function is Q1 40 Q2 8 b The Cournot solution for ... View the full answer