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

question 22

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 = 240 - 2p (so p = 120 - ) . Total costs of running a flight on this route are 900 + 30q, 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) $240.
• B) $900.
• C) $1,800.
• D) $450.
• E) $3,600.

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Definitions:

Sales

Transactions where goods or services are provided in exchange for payment.

Accounting Cycle

The process of recording and processing all financial transactions of a company, from when the transaction occurs, to its inclusion in the financial statements.

Merchandising Company

A business entity that purchases finished products and sells them to consumers without changing the form or nature of the goods.

Service Company

A business that generates revenue through the provision of services rather than selling physical products.