Consider an industry with 2 firms each having marginal cost, Ask an Expert

Economics

Consider an industry with 2 firms, each having marginal cost equal to zero. The inverse demand function facing this industry is

P(Y) = 100 – Y

where Y = y1 + y2

(a) What is the competitive equilibrium level of industry output?

(b) If each firm behaves as a Cournot competitor, what is firm 1’s optimal choice given firm 2’s output?

(d) Calculate the cartel amount of output for the industry.

(e) If firm 1 as follower and firm 2 behaves as leader, calculate the Stackelberg equilibrium output.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M92188303

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