In: Economics

# Suppose in a duopoly market there are two firms, 1 and 2, each with a cost...

1. Suppose in a duopoly market there are two firms, 1 and 2, each with a cost function given as TC1 = 10Q1 and TC2 = 10Q2. The inverse demand in the market is P = 100 – 2(Q1 + Q2). The firms are homogeneous product duopoly.
1. Suppose the market is characterized by Cournot oligopoly. Calculate each firm’s profit-maximizing output, price, and profit. Be sure to show all steps needed for this question.
2. Now suppose the market is characterized by Stackelberg oligopoly. Calculate each firm’s profit-maximizing output, price, and profit.
1. Now suppose each firm colludes in its price and output decision. Calculate each firm’s profit-maximizing output, price, and profit.

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