Suppose the airline industry consisted of only two firms: American and Texas Air Corp. Let the two firms have identical cost functions, C(q) - 52q. Assume that the demand curve for the industry is given by P = 100 - Q and that each firm expects the other to behave as a Cournot competitor. Calculate the Cournot-Nash equilibrlum for each firm, assuming that each chooses the output level that maximizes its profits when taking its rival's output as given. What are the profits of each firm? (Round all quantties and dollar amounts to two decimal places.) When competing, each firm will produce 16 units of output. In turn, each firm will earn profit of $ 256 . What would be the equilibrium quantity if Texas Air had constant marginal and average costs of $10 and American had constant marginal and average costs of $52? If Texas Air had constant marginal and average costs of $10 and American had constant marginal and average costs of $52, American would produce O units and Texas Air Corp. would produceO units.
Suppose the airline industry consisted of only two firms: American and Texas Air Corp. Let the two firms have identical cost functions, C(q) - 52q. Assume that the demand curve for the industry is given by P = 100 - Q and that each firm expects the other to behave as a Cournot competitor. Calculate the Cournot-Nash equilibrlum for each firm, assuming that each chooses the output level that maximizes its profits when taking its rival's output as given. What are the profits of each firm? (Round all quantties and dollar amounts to two decimal places.) When competing, each firm will produce 16 units of output. In turn, each firm will earn profit of $ 256 . What would be the equilibrium quantity if Texas Air had constant marginal and average costs of $10 and American had constant marginal and average costs of $52? If Texas Air had constant marginal and average costs of $10 and American had constant marginal and average costs of $52, American would produce O units and Texas Air Corp. would produceO units.
Chapter15: Imperfect Competition
Section: Chapter Questions
Problem 15.3P
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