A Duopoly Faces the Inverse Demand Curve P = 160

question 53

Multiple Choice

A duopoly faces the inverse demand curve p = 160 - 2q.Firm 1's total cost function is given by C₁(q₁) = 8q₁ and firm 2's total cost function is given by C₂(q₂) =0 10q₂.In a Cournot equilibrium,

• A)the firm with the lower marginal cost produces more.
• B)both firms will produce the same amount.
• C)the firm with the higher marginal cost produces more to cover the higher costs.
• D)the reaction function for both firms is the same since both firms have a constant marginal cost.
• E)More than one of the above is correct.

---

Definitions:

Government Agencies

Organizations operated by the government to enforce laws, administer public policies, and manage public resources.

Group Norms

Shared expectations and rules that guide behavior of people within social groups.

Ethical Behavior

Conduct that is consistent with what society and individuals typically consider to be good values, including honesty, fairness, and integrity.