question archive Two firms are producing identical goods in a market characterized by the inverse demand curve [Math Processing Error]P=60−2Q, where [Math Processing Error]Q is the sum of Firm 1's and Firm 2's output, [Math Processing Error]q1+q2
Two firms are producing identical goods in a market characterized by the inverse demand curve [Math Processing Error]P=60−2Q, where [Math Processing Error]Q is the sum of Firm 1's and Firm 2's output, [Math Processing Error]q1+q2
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Two firms are producing identical goods in a market characterized by the inverse demand curve [Math Processing Error]P=60−2Q, where [Math Processing Error]Q is the sum of Firm 1's and Firm 2's output, [Math Processing Error]q1+q2. Each firm's marginal cost is constant at [Math Processing Error]$12, and fixed costs are zero. Answer the following questions, assuming that the firms are Cournot competitors.
a. Calculate each firm's reaction function,
b. How much output does each firm produce?
c. What is the market price?
d. How much profit does each firm earn?
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