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Suppose that market demand for golf balls is described by Q = 90 -  3P, where Q is measured in kilos of balls. There are two firms that supply the market. Each firm has a constant unit cost of 10.

1. Suppose the firms compete in quantities. How much does each firm sell in a Cournot equilibrium? What is the market price and what are the firms' profits?

2. Suppose the firms compete in price. How much does each firm sell in a Bertrand equilibrium? What is the market price and what are the firms' profits?

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Retselisitsoe Pokothoane
Retselisitsoe PokothoaneLv10
28 Sep 2019

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