Duopolists a and B Face the Following Demand Curves: Q_A

question 21

Multiple Choice

Duopolists A and B face the following demand curves: Q_A = 100 - 2P_A + 5P_B and Q_B = 120 - 3P_B + 4P_A.If both firms have zero marginal cost,what are the profit-maximizing prices and quantities?

• A) P_A = 300, Q_A = 600, P_B = 220, Q_B = 660.
• B) P_A = 200, Q_A = 400, P_B = 200, Q_B = 400.
• C) P_A = 200, Q_A = 700, P_B = 200, Q_B = 320.
• D) P_A = 300, Q_A = 750, P_B = 250, Q_B = 570.
• E) P_A = 300, Q_A = 1,250, P_B = 350, Q_B = 270.

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Definitions:

Salvage Value

Salvage value is the estimated residual value of an asset at the end of its useful life, determining how much it can be sold for or disposed of.

Double-Declining-Balance Depreciation

An accelerated depreciation method that doubles the depreciation rate of an asset, causing it to lose value quicker than under traditional linear depreciation methods.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded for an asset since it was put into use.

Natural Resources

Substances like minerals, forests, water, and fertile land that are found in nature and can be utilized for economic benefits.