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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:

Perceives

The process of becoming aware of something through the senses and the way in which information is interpreted and understood.

Examination

A formal test of a person's knowledge or proficiency in a subject or skill.

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A system of behavior modification based on the systematic reinforcement of target behavior, wherein tokens are given as rewards which can be exchanged for desired items or privileges.

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