The inverse demand function for diamonds is P = 1500 − 2Q. The market for diamonds...

The inverse demand function for diamonds is P = 1500 − 2Q. The market for diamonds consists of two firms, Shiny and Dull. Shinys cost function is c(q) = 300q + 5,000 and Dulls cost function is c(q) = 300q + 10,000/4. Which of the following statements is true? ANS is E) but please show the working out

(a) Cournot equilibrium total output is 400. Stackelberg eq. total output is 300.

(b) Cournot equilibrium total output is 200. Stackelberg eq. total output is 450.

(c) Cournot equilibrium total output is 200. Stackelberg eq. total output is 150.

(d) Cournot equilibrium total output is 200. Stackelberg eq. total output is 300.

(e) Cournot equilibrium total output is 400. Stackelberg eq. total output is 450.

Expert Solution

Rahul Sunny answered 2 years ago

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