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Suppose the Demand for Pizza in a Small Isolated Town

question 48

Essay

Suppose the demand for pizza in a small isolated town is p = 10 - Q.There are only two firms,A and B,and each has a cost function TC = 2 + Q.Compare the firms' profits if they behave as Cournot duopolists with their profits if they form a cartel and share the market.


Definitions:

Entrepreneurs

Individuals who initiate, manage, and assume the risks of a business venture in the hope of making a profit.

Emotional Pain

A psychological state of distress or suffering caused by an individual's circumstances, relationships, or inner conflict.

Fear of Failure

An apprehension or anxiety about not succeeding in a task or achieving a goal, which can sometimes inhibit actions and risk-taking.

Uncertainty

A situation or condition where there is a lack of certainty or predictability, often leading to risk or indecision.

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