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ume each firm's marginal cost of producing an automobile for sale in this market is $15,000, that Firm 1 has fixed costs of $50,000,000 and Firm 2 has fixed costs of $40,000,000. Remember, in the Cournot world, a simultaneous quantity choice is made by each firm as a function of what each thinks the other firm will choose. Their choice then serves as their "no regret" choice of their output given what they thought the other firm would choose, and together their output choices comprise the Nash equilibrium, with neither firm being under an inclination to alter their Q choice.

a. How much will be the consumer surplus generated in this market?

b. How large will be each firm's profits?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M974067

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