Consider a Cournot Duopoly with the Following Inverse Demand Function

question 120

Multiple Choice

Consider a Cournot duopoly with the following inverse demand function: P = 100 − 2Q₁ − 2Q₂.The firms' marginal costs are identical and are given by MC_i(Q_i) = 2Q_i.Based on this information,firm 1 and 2's marginal revenue functions are:

• A) MR₁(Q₁,Q₂) = 100 − 2Q₁ − Q₂ and MR₂(Q₁,Q₂) = 100 − Q₁ − 2Q₂.
• B) MR₁(Q₁,Q₂) = 100 − 4Q₁ − 2Q₂ and MR₂(Q₁,Q₂) = 100 − 2Q₁ − 4Q₂.
• C) MR₁(Q₁,Q₂) = 100 − 2Q₁ − 4Q₂ and MR₂(Q₁,Q₂) = 100 − 4Q₁ − 2Q₂.
• D) MR₁(Q₁,Q₂) = 24.5 − 0.5Q₂ and MR₂(Q₁,Q₂) = 24.5 − 0.5Q₁.

---

Definitions:

Negative Feedback

A regulatory mechanism in which a stimulus causes an opposite output in order to maintain an optimal level of whatever is being regulated.

Effector

An organ or cell that acts in response to a stimulus, often referring to muscles or glands responding to neural signals.

Stimulus

A stimulus is any external or internal change that influences the activity of an organism or any of its parts, leading to a physiological response.

Differentiation

The process by which cells or tissues undergo a change toward a more specialized form or function, often in the context of development.