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Suppose the demand for donuts in Bethlehem is; P = 10 – Q where Q =...

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Economics

Suppose the demand for donuts in Bethlehem is;

P = 10 – Q where Q = qA + qB

There are only two firms that sell donuts in Bethlehem, Firm Aand Firm B. Each firm has the same cost function;

TC = 2 + q

a. Determine the Cournot equilibrium.

b. Explain why the intersection of the best-response functionsis the Cournot equilibrium.

Answer & Explanation Solved by verified expert
4.0 Ratings (780 Votes)
AnswerCournotsModel is a example of oligopoly industry in which firms are assumedto    See Answer
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