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# Suppose duopolists in the market for spring water share a market demand curve given by P = 50 0.02Q, where P is the price per gallon and Q is...

Suppose duopolists in the market for spring water share a market demand curve given by P = 50 − 0.02Q, where P is the price per gallon and Q is thousands of gallons of water per day. The marginal cost of producing water is assumed to be zero (0) for both firms.

If firm A produces zero gallons of water per day, firm B’s best response is producing:

Optimal output for Cournot duopolists moving simultaneously is

If one firm acts as a first mover, the second firm will produce

The way to answer this question is ... View the full answer

P= 50-.02q
MC= 0
part b
COURNOT:
P = 50 –0.02(Q1+Q2)
TR1= 50Q1-0.02Q12-.02Q1Q2
MR1= 50-0.04Q1-.02Q2
Equate this to MC1=0 and we get 50-.04Q1-.02Q2=0 as the reaction curve
For firm 2 MR2=...

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