Question

Questions 16-17 rely on the following information. Firms H and I Cournot compete in a market with inverse demand given by P 160-Q, where Q is the sum of Firm H and Firm I's output, Q = QH + Q1. Firn H's costs are given by TCH = 100H, and l's are given by TC,-10Q1. 16. What will market output, Q, be in equilibrium when both firms are maximizing profit? 17. What price will the firms charge when maximizing profits in equilibrium? Questions 18-19 rely on the following information Vendors A and B compete in the sale of a homogenous product, at an identical price, along a linear boardwalk with 9 spaces (Space 1 through Space 9) and customers distributed as shown by the numbers in each box (below). Customers purchase from whichever vendor is located closest to them, and equidistant customers are split evenly. 2 4 Space Space 2 Space 3 Space 4 Space 5 Space 6 Space 7 Space 8 Space 9 18. Suppose X -2 (so there are 34 customers total). Where will the vendors locate in equilibrium if this is the case? (Write your answer: (Vendor A's Location, Vendor B's Location). 19. Is there any value of X that would make (Space 4, Space 4) an equilibrium? If yes, what is that value of X? If no, write "no." (Hint: An equilibrium is found when no vendor can benefit by changing their location given the other vendor's location).

Answer 1