Suppose That Grinch and Grubb Go into the Wine Business

question 13

Multiple Choice

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 = $480 - .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 $30 and Grubb has marginal costs of $60.How much is Grinch's output in equilibrium?

• A)1,600
• B)1,200
• C)800
• D)400
• E)2,400

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