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MrGrimey MrGrimey
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6 years ago
Two firms sell identical products and compete as Cournot (price-setting) competitors in a market with a demand of p = 150 - Q. Initially, each firm has a constant marginal and average cost of $3 per unit of output.
a.   Compute each firm's best response function. Plot each of these functions on a graph with q1 on the horizontal axis and q2 on the vertical.
b.   Compute the Cournot equilibrium quantities.
c.   Suppose that firm 1's cost rises to $4 per unit and firm 2's decreases to $2. On a graph, show how this will change the best response functions. How will the equilibrium change according to the changes you made on the graph?
Textbook 
Microeconomics: Theory and Applications with Calculus

Microeconomics: Theory and Applications with Calculus


Edition: 4th
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RumkoRumko
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6 years ago
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MrGrimey Author
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6 years ago
I appreciate what you did here, answered it right Smiling Face with Open Mouth
taydav
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Yesterday
Just got PERFECT on my quiz
branbran2k16
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2 hours ago
Helped a lot
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