8.17. EFFICIENCY LOSS UNDER COURNOT. Consider a market where two firms simultaneous set quantities of a homogeneous product with demand given by Q = 37.5-P/4. Each firm has constant marginal cost equal to 30. (a) Determine equilibrium output and price. (b) Compute the efficiency loss as a percentage of the efficiency loss under monopoly.

8.17. EFFICIENCY LOSS UNDER COURNOT. Consider a market where two firms simultaneous set quantities of a homogeneous product with demand given by Q = 37.5-P/4. Each firm has constant marginal cost equal to 30. (a) Determine equilibrium output and price. (b) Compute the efficiency loss as a percentage of the efficiency loss under monopoly.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.10P: Inverse elasticity rule Use the first-order condition (Equation 15.2 ) for a Cournot firm to show...

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