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

question 14

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 = $360 - .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 $75 and Grubb has marginal costs of $15. How much Grinch's output in equilibrium?

• A) 562.50
• B) 187.50
• C) 750
• D) 375
• E) 1,125