Consider a market in which two firms sell their identical outputs. The demand function is p=100...

 

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Consider a market in which two firms sell their identical outputs. The demand function is p=100 – 2.q. The cost functions of the two firms are C, =2.91, C2=5•q2. (a) Find the Cournot equilibrium. What is the equilibrium price? (b) Now suppose the firms collude in order to maximize the joint profit (the sum of each firm's profits). Find the output for each firm and the corresponding price. (c) Compare the outcomes in the two cases above. In particular, compare the total output numbers as well as prices. In which case is the total profit higher? In which case are individual profits higher? Consider a market in which two firms sell their identical outputs. The demand function is p=100 – 2.q. The cost functions of the two firms are C, =2.91, C2=5•q2. (a) Find the Cournot equilibrium. What is the equilibrium price? (b) Now suppose the firms collude in order to maximize the joint profit (the sum of each firm's profits). Find the output for each firm and the corresponding price. (c) Compare the outcomes in the two cases above. In particular, compare the total output numbers as well as prices. In which case is the total profit higher? In which case are individual profits higher?

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Given Plo0 29 as the demand funchion The cost Sunchor... View the full answer