2. Consider a Cournot duopoly with a demand function of p=10-Q (where Q=9₁ +9₂) and a constant marginal cost of c>0. a) Find the two firms' best-response functions. b) Find the Nash equilibrium output. c) What happens to the equilibrium market price as c increases (assuming that c remains below 10)?

2. Consider a Cournot duopoly with a demand function of p=10-Q (where Q=9₁ +9₂) and a constant marginal cost of c>0. a) Find the two firms' best-response functions. b) Find the Nash equilibrium output. c) What happens to the equilibrium market price as c increases (assuming that c remains below 10)?

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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