Draw a Graph That Shows the Effect on the Equilibrium

question 31

Essay

Draw a graph that shows the effect on the equilibrium quantities if the government subsidizes one firm in a Cournot duopoly with a per-unit subsidy.Assume that the best-response functions are linear.Explain the new equilibrium quantities.

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Definitions:

Consumption Proportions

The ratios at which various goods and services are consumed by an individual or in an economy.

Price Change

A variation in the price level of goods or services over a period of time, which can affect demand, supply, and market equilibrium.

Initial Endowment

The initial set of assets, goods, or resources individuals or entities possess before engaging in transactions or economic activities.

Kumquats

Small, orange citrus fruits with a sweet and tangy flavor, edible both peel and flesh.