Analysts have estimated the inverse market demand in a homogeneous-product Cournot duopoly to be P= 200 - 3(Q1 + Q2). They estimate costs to be G(Q1)= 26Q1 and C2(Q2)=32Q2- a. Determine the reaction function for each firm. Firm 1: Q₁ = Firm 2: Q2= Q2 Q1 b. Calculate each firm's equilibrium output. Firm 1: Firm 2: c. Calculate the equilibrium market price. $ d. Calculate the profit each firm earns in equilibrium. Firm 1: $ Firm 2: $

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Question

only b explain do fast

Analysts have estimated the inverse market demand in a homogeneous-product
Cournot duopoly to be P= 200 - 3(Q1 + Q2). They estimate costs to be G(Q1)=
26Q1 and C2(Q2)=32Q2-
a. Determine the reaction function for each firm.
Firm 1: Q₁ =
Firm 2: Q2=
Q2
Q1
b. Calculate each firm's equilibrium output.
Firm 1:
Firm 2:
c. Calculate the equilibrium market price.
$
d. Calculate the profit each firm earns in equilibrium.
Firm 1: $
Firm 2: $
Transcribed Image Text:Analysts have estimated the inverse market demand in a homogeneous-product Cournot duopoly to be P= 200 - 3(Q1 + Q2). They estimate costs to be G(Q1)= 26Q1 and C2(Q2)=32Q2- a. Determine the reaction function for each firm. Firm 1: Q₁ = Firm 2: Q2= Q2 Q1 b. Calculate each firm's equilibrium output. Firm 1: Firm 2: c. Calculate the equilibrium market price. $ d. Calculate the profit each firm earns in equilibrium. Firm 1: $ Firm 2: $
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education