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
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Chapter1: Making Economics Decisions
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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
ТСВ 3 5000+120@B
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)
Transcribed Image Text: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 ТСВ 3 5000+120@B 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)
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