Consider a Market with Inverse Demand P = 100 -

question 13

Essay

Consider a market with inverse demand p = 100 - 2Q.Firms have no fixed cost and constant marginal cost c.
a.Derive the firms' outputs and profits when this market is served by Cournot duopolists.
b.How do outputs and profits vary with c? Specifically,use calculus to find the derivative of the output of each firm and profit of each firm with respect to c.
c.Suppose the firm's also have a fixed cost of F in addition to the marginal cost c.How does F alter the best response functions and NE? Explain in words.(For technical reasons,assume that both firms still produce a positive level of output in equilibrium)

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Definitions:

Shoveling Snow

Physical activity of moving snow with a shovel to clear areas, which can be demanding on the body and heart.

Excess Calories

Consuming more calories than the body uses, potentially leading to weight gain and associated health risks.

Body Fat

The portion of the human body composed of fat tissue, important for energy storage, insulation, and protection.

Essential Fat

Necessary fat required for normal physiological functions, found in the marrow, organs, central nervous system, and muscles.