Analysts have estimated the inverse market demand in a homogeneous-product Cournot duopoly to be P= 150 −3 (Q1 + Q2). They estimate costs to be G₁(Q1) = 18 Q1 and C2(Q2) = 30 Q2. a. Determine the reaction function for each firm. Firm 1: Q₁ = 0.5 Q2 0.5 Q1 Firm 2: Q2 b. Calculate each firm's equilibrium output. Firm 1: Firm 2: c. Calculate the equilibrium market price. $ d. Calculate the profit each firm earns in equilibrium. Firm 1: $ Firm 2: $

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Analysts have estimated the inverse market demand in a homogeneous-product Cournot duopoly to be P= 150 −3 (Q1 + Q2).
They estimate costs to be C₁(Q1) = 18 Q1 and C2(Q2) = 30 Q2.
a. Determine the reaction function for each firm.
Firm 1: Q1
0.5 Q2
0.5 Q1
Firm 2: Q2
b. Calculate each firm's equilibrium output.
Firm 1:
Firm 2:
c. Calculate the equilibrium market price.
$
d. Calculate the profit each firm earns in equilibrium.
Firm 1: $
Firm 2: $
Transcribed Image Text:Analysts have estimated the inverse market demand in a homogeneous-product Cournot duopoly to be P= 150 −3 (Q1 + Q2). They estimate costs to be C₁(Q1) = 18 Q1 and C2(Q2) = 30 Q2. a. Determine the reaction function for each firm. Firm 1: Q1 0.5 Q2 0.5 Q1 Firm 2: Q2 b. Calculate each firm's equilibrium output. Firm 1: Firm 2: c. Calculate the equilibrium market price. $ d. Calculate the profit each firm earns in equilibrium. Firm 1: $ Firm 2: $
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