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Suppose that the market demand for fax paper is given by P = 202Q. The industry consists of two rms facing a constant marginal cost of $12 and zero...

Suppose that the market demand for fax paper is given by P = 20−2Q. The industry consists of two firms facing a constant marginal cost of $12 and zero fixed costs. Assuming that the two firms play a Cournot game:

a (15). Calculate the equilibrium quantity for each firm.

b (3). Calculate the market equilibrium quantity and price.

c (2). Calculate the implied profit for each firm.



. The firms now play a Stackelberg game and firm 1 is the leader.

a (15). Calculate the Stackelberg equilibrium quantity for each firm.

b (3). Calculate the market equilibrium quantity and price.

c (2). Calculate the implied profit for each firm.

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