Assume that two companies (A and B) are duopolists that produce identical products. Demand for the products is given by the following linear demand functions: P=500-QA-QB where QA and QB are the quantities sold by the respective firms and P is the selling price. Total cost functions for the two companies are TCA = 6000+100QA TCB = 5000+120QB ai. Assume that the firms act independently as in the Cournot model, determine the long-run equilibrium output and selling price for each firm. aii. Determine the total profits for each firm at the equilibrium output found in part (ai)

Assume that two companies (A and B) are duopolists that produce identical products. Demand for the products is given by the following linear demand functions: P=500-QA-QB where QA and QB are the quantities sold by the respective firms and P is the selling price. Total cost functions for the two companies are TCA = 6000+100QA TCB = 5000+120QB ai. Assume that the firms act independently as in the Cournot model, determine the long-run equilibrium output and selling price for each firm. aii. Determine the total profits for each firm at the equilibrium output found in part (ai)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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