Suppose That Two Airlines Are Cournot Duopolists Serving the Peoria-Dubuque

question 9

Multiple Choice

Suppose that two airlines are Cournot duopolists serving the Peoria-Dubuque route, and the demand curve for tickets per day is Q = 220 - 2p (so p = 110 - Q/2) .Total costs of running a flight on this route are 1,400 + 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)$400.
• B)$800.
• C)$220.
• D)$700.
• E)$3,000.

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