Assume two (2) firms in an industry producing a homogeneous product. Given the market demand as...

Assume two (2) firms in an industry producing a homogeneous product. Given the market demand as P = 100 -(q1+ q2), where q1 and q2 are output levels of firm 1 and firm 2 respectively; and the cost functions are as follows: C1= 30q1,and C2= 20q2:

i) Determine each firm’s profit-maximizing level of output (q1 and q2).Be sure to state each firm’s ‘reaction function’.(Cournot Solution!)

ii)How much profit does each firm make?

iii) What is the (total) industry output (Q)and market price (P)?

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Expert Solution

Rahul Sunny answered 1 year ago

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