Suppose Cournot Duopolist Firms Operate with Each Having a Cost

question 74

Multiple Choice

Suppose Cournot duopolist firms operate with each having a cost of 30q_i (i = 1,2) so that each firm's marginal cost is 30.The inverse market demand curve is P = 120 - Q where Q = q₁ + q₂.Suppose there were no barriers to entry and firms continued to enter so long as there were positive economic profits.At the Nash-Cournot equilibrium,the total output,Q,is

• A) 30.
• B) 45.
• C) 60.
• D) 90.

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Definitions:

Price Level

The average of current prices across the entire spectrum of goods and services produced in the economy.

Bondholders

Individuals or entities that hold the debt securities issued by corporations or governments, entitling them to receive a specified amount of interest and repayment of the principal.

Stockholders

Owners of the stock of the corporation.

Dividends

Payments made by a corporation to its shareholder members, usually distributed from the company's profits.