In a Cournot Market with Two Firms, the Inverse Market

question 21

Multiple Choice

In a Cournot market with two firms, the inverse market demand curve is P = 50 - 2Q, where Q = q₁ + q₂ (Firm 1's output = q₁; Firm 2's output = q₂) . If Firm 2 produces 10 units of output, what is Firm 1's residual demand curve?

• A) P = 30 - 2q₁
• B) P = 40 - 2q₁
• C) P = 10 - 2q₁
• D) P = 40 - q₁

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