Two firms compete under Cournot competition with constant marginal costs c1 = 2 and c2 =...

Two firms compete under Cournot competition with constant marginal costs c1 = 2 and c2 = 4. The market demand is P=18-Q .

a) Compute the market share of each firm, the market price, and the total quantity produced in the market.

b) [CHALLENGING] You later hear that the marginal cost of firm 2 increased, and realize that the market price is now P = 9. What is the new marginal cost c2 ?

Expert Solution

Rahul Sunny answered 8 months ago

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