Question

A homogeneous products duopoly faces a market demand function given by P = 300 - 3Q, where Q = Q1 + Q2. Both firms have a constant marginal cost MC = 100.

What is the Cournot equilibrium quantity per firm and price in this market?

Answer 1

To find the Cournot equilibrium quantity per firm and price in a homogeneous products duopoly, we can use the market demand function and divide the market quantity equally between the firms.

Step-by-step explanation:

In a homogeneous products duopoly facing a market demand function given by P = 300 - 3Q, where Q = Q1 + Q2, the Cournot equilibrium quantity per firm and price can be determined using the following steps:

1. Calculate the market quantity by solving for Q in the demand function equation: 300 - 3Q = Q1 + Q2
2. Find the individual quantity produced by each firm by dividing the market quantity equally: Q1 = Q2 = Q/2
3. Substitute the individual quantity back into the demand function to find the price: P = 300 - 3(Q/2)

The Cournot equilibrium quantity per firm and price in this market can be found by solving these equations.