The market for a good is supplied by two companies whose total cost functions are given by C₁ (9₁) = 30q₁ and C₂ (92) = 30q2 respectively. The inverse market demand curve is given by: P(Q)=120-Q, where Q = Q₁ + Q₂. Calculate the price, quantity, and profits of each company in the following scenarios and indicate which would be more efficient: a) Companies compete on prices (Bertrand). b) Companies compete in quantities (Cournot). c) Companies form a cartel to maximize joint profits.

The market for a good is supplied by two companies whose total cost functions are given by C₁ (9₁) = 30q₁ and C₂ (92) = 30q2 respectively. The inverse market demand curve is given by: P(Q)=120-Q, where Q = Q₁ + Q₂. Calculate the price, quantity, and profits of each company in the following scenarios and indicate which would be more efficient: a) Companies compete on prices (Bertrand). b) Companies compete in quantities (Cournot). c) Companies form a cartel to maximize joint profits.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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