Question

Exercise 12.1

Assume that two companies (C and D) are duopolists that produce identical products. Demand for the products is given by the following linear demand function:

P=600−QC−QDP=600−QC−QD

where QCQC and QDQD are the quantities sold by the respective firms and P is the selling price. Total cost functions for the two companies are

TCC=25,000+100QCTCC=25,000+100QC

TCD=20,000+125QDTCD=20,000+125QD

Assume that the firms act independently as in the Cournot model (i.e., each firm assumes that the other firm’s output will not change).

For Company C, the long-run equilibrium output is- , and the selling price is.

For Company D, the long-run equilibrium output is- , and the selling price is.

At the equilibrium output, Company C earns total profits of, and Company D earns total profits of.

Answer 1

O -even -hem the data * The oo companies are D Produce is an identical product s duopofists thot tte heve Sabium output ond Pice Pice X Quality Nou) ( Ron® unction = "Total Cost-Total evenwl コS,000 + 100@c-600 Q1+4e" t Qc-QD applied กา (-) on Right side.

-> These are déilfe rehihak the totat pofit tonchio 600-62-QD 600 AD Now om

-solving @ ① @cr S2 〉 [de. 1751 175 Substuk«c and Sp value in F These are tuo totol rhefit con eacLh.m啸atta qualihium auu fond

-)-25000+ soo (IPS)-(Ms) --(PS)(1 D) 25,000 +87,500-30,625-26AD 5,62s 5,62 → -20,000 tクリ2n-22,500-26, 2,0 米