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Calculate the equilibrium quantity for ?rm

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Reference no: EM131934659

Suppose that the market demand for fax paper is given by P = 20-2Q. The industry consists of two ?rms facing a constant marginal cost of $12 and zero ?xed costs. Assuming that the two ?rms play a Cournot game:

a. Calculate the equilibrium quantity for each ?rm.

b. Calculate the market equilibrium quantity and price.

c. Calculate the implied pro?t for each ?rm.

The ?rms now play a Stackelberg game and ?rm 1 is the leader.

a. Calculate the Stackelberg equilibrium quantity for each ?rm.

b. Calculate the market equilibrium quantity and price.

c. Calculate the implied pro?t for each ?rm.

Reference no: EM131934659

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