Suppose That Two Airlines Are Cournot Duopolists Serving the Peoria-Dubuque

question 9

Multiple Choice

Suppose that two airlines are Cournot duopolists serving the Peoria-Dubuque route, and the demand curve for tickets per day is Q = 230 - 2p (so p = 115 - ) . Total costs of running a flight on this route are 450 + 40q, where q is the number of passengers on the flight. Each flight has a capacity of 80 passengers. In Cournot equilibrium, each duopolist will run one flight per day and will make a daily profit of

• A) $800.
• B) $225.
• C) $230.
• D) $1,600.
• E) $3,250.

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