Impact of increase in MC on each firm's equilibrium output and profits in Cournot duopoly & Sweezy oligopoly model.
Consider a homogeneous-product duopoly where each firm initially produces at a constant marginal cost of $100 and there are no fixed costs. Describe what would happen to each company's equilibrium output and profits if firm's marginal cost increased to $110 but firm 1's marginal cost remained constant at $100 in each of the following settings:
a. Cournot duopoly
b. Sweezy oligopoly