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

question 11

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 = 190 - 2p (so p = 95 - ) . Total costs of running a flight on this route are 1,050 + 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) $525.
• B) $190.
• C) $200.
• D) $400.
• E) $2,250.

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