QUESTION 1. Cournot Model with nonidentical firms Assuming that the inverse market demand function facing a duopoly is p = a - bQ and the marginal cost of firm 1 is m and that of firm 2 is m + x, where x > 0. 1.1 Determine each firm's best response function. 1.2 What are the quantities produce by both firms at Nash-Cournot equilibrium? 1.3 Which firm produces more? 1.4 Which firm has the highest profit?

QUESTION 1. Cournot Model with nonidentical firms Assuming that the inverse market demand function facing a duopoly is p = a - bQ and the marginal cost of firm 1 is m and that of firm 2 is m + x, where x > 0. 1.1 Determine each firm's best response function. 1.2 What are the quantities produce by both firms at Nash-Cournot equilibrium? 1.3 Which firm produces more? 1.4 Which firm has the highest profit?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter12: Price And Output Determination: Oligopoly

Section: Chapter Questions

Problem 2E

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