Question
Suppose that the (inverse) market demand for good A is given by P = 400 - 2Q Where Q is total industry output. There are two firms that produce
Suppose that the (inverse) market demand for good A is given by P = 400 - 2Q Where Q is total industry output. There are two firms that produce
A. Each firm has a constant marginal cost of production equal to Rs.40 and they are competing in quantities. That is, they each choose production levels simultaneously. Calculate profit maximising total quantity
Equating both BR functions, q2 = 90 – 0.5 (90 - 0.5 q2) q2 = 90 – 45 + 0.25 q2 0.75 q2 = 45 q2 = 60 Also, q1 = 90 – 0.5 (60) = 90 – 30 = 60 Q = q1 + q2 = 120More International Economics Questions
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