The Inverse Market Demand Curve for Protocol Droids Is P

question 63

Essay

The inverse market demand curve for protocol droids is P = 4,000 - 2Q, where Q is the quantity of protocol droids and P is the market price. Protocol droids can be produced at a constant marginal cost of $1,000, and all protocol droids are identical.
a. Suppose the market for protocol droids is served by two firms that form a cartel and evenly split the market output. What are the market output and price level?
b. Suppose the market for protocol droids is served by two firms that are engaged in Bertrand competition. What are the market output and price level?
c. Suppose the market for protocol droids is served by two firms that are engaged in Cournot competition. The inverse market demand curve P = 4,000 - 2(q₁ + q₂), where the market output, Q, is the sum of each firm's output, q₁ + q_2. What are the market output and price level?
d. Suppose the market for protocol droids is served by two firms that are engaged in Stackelberg competition. The inverse market demand curve P = 4,000 - 2(q₁ + q₂), where the market output, Q, is the sum of each firm's output, q₁ + q_2. What are the market output and price level?

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