am. 124. Cournot Duopoly with differentiated products Suppose the firms in a duopolyproduce differentiated products (products that are similar but have attributes thatdistinguish them from other products in the market.) The inverse demand for Firm 1is p₁ =52 91 -0.5q2. The inverse demand for Firm 2 is p2 = 4092-0.5q1. Eachfirm has a marginal cost of MC = 1. Solve for Cournot-Nash equilibrium quantities.

Step 1: Understand the Cournot ModelThe Cournot model assumes firms simultaneously choose quantities…

Answered: Cournot Duopoly with differentiated…

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter14: Monopolistic Competition And Product Differentiation

Section: Chapter Questions

Problem 16P

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Suppose the inverse demand for a duopoly is given by P = 30 – Q. Marginal cost is given by €12. The quantity that each firm will produce in the Cournot equilibrium is A. 12 B. 6 C. 3 D. 18
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Short Answer Question: Consider a Bertrand Duopoly Model. Market demand curve is given by Q = 200 – P., Firm A has a marginal cost of S20 and Firm B has a marginal cost of $50. In equilibrium, what is the market price? How many units does each firm produce? Calculate each firm's profit.

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