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The inverse market demand in a homogeneous product Cournot duopoly is given by = 140 5(1 + 2). and marginal costs are 1(1) = 101 and 2(2) = 20 A....
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Question

The inverse market demand in a homogeneous product Cournot duopoly

is given by = 140 − 5( 1 + 2). and marginal costs are 1( 1) = 10 1 and 2( 2) = 20
A. Determine the reaction function for each firm. [4+4 marks]
B. Use a graph to depict the Cournot Nash equilibrium. [3marks]
C. Calculate each firm's equilibrium output. [5marks]
D. Calculate the equilibrium market price. [4marks]
E. Calculate the profit each firm earns in equilibrium. [5marks]

Step-by-step answer

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Subject: Business, Economics

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