Consider a Cournot Duopoly with the Following Inverse Demand Function

question 95

Multiple Choice

Consider a Cournot duopoly with the following inverse demand function: P = 100 - 2Q₁ - 2Q₂.The firms' marginal cost are identical and given by MC_i(Q_i) = 2Q_i.Based on this information firm 1 and 2's reaction functions are

• A)r₁(Q₂) = 24.5 - 0.5Q₁ and r₂(Q₁) = 24.5 - 0.5Q₂.
• B)r₁(Q₂) = 24.5 - 0.5Q₂ and r₁(Q₂) = 24.5 - 0.5Q₁.
• C)Q₁ = 49 - 0.5Q₂ and Q₂ = 49 - 0.5Q₁.
• D)Q₁ = 49 - 0.25Q₂ and Q₂ = 49 - 0.25Q₁.

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Definitions:

Cartilages

A flexible, strong connective tissue found in various parts of the body such as joints, nose, and ears, providing support and cushioning.

Cyan

A greenish-blue color, one of the primary subtractive colors used in color printing and photography.

Septum

A partition separating two chambers, such as in the heart or nose, that is typically made of muscle or bone.

Anterior Nares

The technical term for the nostrils, which are the external openings of the nasal cavity.