In Problem 5, Suppose That Grinch and Grubb Go into the Wine

question 23

Multiple Choice

In Problem 5, suppose that Grinch and Grubb go into the wine business in a small country where wine is difficult to grow. The demand for wine is given by p = $480 - .2Q, where p is the price and Q is the total quantity sold. The industry consists of just the two Cournot duopolists, Grinch and Grubb. Imports are prohibited. Grinch has constant marginal costs of $6 and Grubb has marginal costs of $45. How much Grinch's output in equilibrium?

• A) 675
• B) 1,350
• C) 337.50
• D) 1,012.50
• E) 2,025

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