In Problem 6, Suppose That Two Cournot Duopolists Serve the Peoria-Dubuque

question 12

Multiple Choice

In Problem 6, suppose that two Cournot duopolists serve the Peoria-Dubuque route, and the demand curve for tickets per day is Q = 250 - 2p (so p = 125 - ) . Total costs of running a flight on this route are 2,050 + 20q, 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) $1,025.
• B) $400.
• C) $250.
• D) $800.
• E) $3,850.

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