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Q5. Consider that there are only two companies in oil industry: Be Oil owned by Quentin...

Q5. Consider that there are only two companies in oil industry: Be Oil owned by Quentin Bell (B) and Chrome owned by Mr. SWOSU (C). The two companies B and C are duopolists that produce oil.

Demand for oil: P = 600 –QB – QC where QB and QC are the quantities of oil produced by firms B and C.

Marginal revenue for the two firms: MRB = 600 -2QB – QC and MRC = 600 –QB – 2QC

Total cost functions for the two firms: TCB = 25000+100QB and TCC = 20000+125QC

Marginal cost functions for the two firms: MCB = 100 and MCC = 125.

5.1. Find the profit maximizing output for each firm. Please show your works.

5.2. Find the equilibrium price of oil.

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