Consider two firms producing identical goods q with the same marginal cost of MC = 40.
They face a market demand of P = 100 - 2QD. Round answers to one decimal place.
1) What is firm 1's marginal revenue equation?
2) What is firm 1's best response function to firm 2's output level?
3) What is firm 2's best response function to firm 1's output level?
4) What is the Cournot equilibrium market price and output?
5) What is each firm's Cournot equilibrium output and profit?
6) What are consumer, producer, and total surplus in the Cournot equilibrium?
7) What is the Cournot equilibrium dead-weight loss?
8) The Cournot equilibrium is
as the two firms are acting as
Score = 0