Demand for bowling balls in a market is given by the equation P = 20-2q. The...

Demand for bowling balls in a market is given by the equation P = 20-2q. The cost of each ball is $4.

a) If firm A is the only firm in the market, how many balls will A produce?

b) If firm B joins the market what is the equation for B’s reaction line?

c) If both A and B are in the market, what is the equation for firm A’s reaction line?

d) What is the Cournot equilibrium quantity for each firm in the duopoly?

e) What was the price and total quantity of the balls when the industry was a monopoly?

f) What was the price and total quantity of the balls when the industry became a duopoly?

g) Summarize the change in price and quantity with the market becoming a duopoly from a monopoly. Include a graph with your answers.

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

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