Question

Carl and Simon are the only sellers of pumpkins at the market, where the total demand
function for pumpkins is q =3 ,200−1,600p. The total number of pumpkins sold at the market
is q = qC + qS, where qC is the number that Carl sells, qS is the number that Simon sells. The
cost of producing pumpkins for each farmer is $.50 per pumpkin; the fixed costs are zero.
a. Find the total inverse demand function for pumpkins.
b. Find the Cournot equilibrium price and quantities.
c. Suppose now that every spring the snow thaws off of Carl’s pumpkin field a week
before it thaws off of Simon’s. Therefore, Carl can plant his pumpkins one week earlier
than Simon while predicting Simon’s choice based on the previous year information.
Simon observes Carl’s choice and chooses how much pumpkin to plant. Find the new
equilibrium price and quantities.

Answer 1

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