Consider two firms facing the demand curve

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Consider two firms facing the demand curve P = 50 - 5Q where Q = Q1 +Q2 . The rms cost functions are C1 (Q1 ) = 20 + 10Q1 and C2 (Q2 ) = 10 + 12Q2 .

(a) If they collude, how much will each firm produce? What would be each firm's profit?

(b) What is each rms equilibrium output and profit if they behave non cooperatively? Use the Cournot model.

Reference no: EM13818491

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