Question

Two identical firms face a linear demand curve (written as inverse demand of P = 50 -0.50, The marginal cost for each firm is MC = 0. Assume that both firms compete as Cournot dupolists. Find the equilibrium output for each firm and the market price. o Select one: a. Each firm will produce 66.67 units, and the market price is $33.33 b. Each firm will produce 25 units, and the market price is $25 c. Each firm will produce 100 units, and the market price is $5 d. Each firm will produce 33.33 units, and the market price is $16.67 e none of these answer show the correct outputs and price O o

Answer 1

Answer - (d.)

ANSWER P = 50-0.5 Q = q + 92 MC=0 P= 50 - 0.56917012) TRI = P xq = 80 -0.5(9, 19/2) q = Soq,-0-59 2 - 0:59.92 MRI = so-q -0.592 Try = Px92= (50-0-5641442)) *4.2 = 5092 - 0.59, 92-0-sq2² MR2=50-0.59 - 9/2000 For maximizing profit for both froms) MR = MC & MR2 = MC 50-4. -0.5920 so-0.59, -q2 = 0 a to sq 2-50 o Sq, +92-5o. 2q+q2 =100 9 +2922100 24,+492-200 29 +49/2= - 200 2902t 982=100 342-100 qe=333)

1-2100 -- 7(83.33) - 33.33 P: 50 - 0.5( 37.33 1 33.33) So - 33.33 =16-67 942 - 33.33_Latke P - $16.67 .