The Inverse Demand for Designer Blankets Is Given by P

question 69

Multiple Choice

The inverse demand for designer blankets is given by P = 40 - 0.01Q, where P is the price per blanket and Q is the total number of blankets brought to market. Two shops in the market supply specialty blankets. Shop 1's cost function is given by C₁ = 0.02q₁², where q₁ is the number it brings to market. Shop 2's cost function is given by C₂ = 0.02q₂², where q₂ is the number it brings to market. Given that the two shops compete by setting output (Cournot) , the profit maximizing level of output for Shop 1 is ____.

• A) 532.34
• B) 571.42
• C) 1,064.68
• D) 1,142.84

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