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A Cournot duopoly with homogeneous products has an inverse demand curve P = 6 - 3(QA + QB) and costs are CA(QA) = 2QA and CB(QB) = 1.5QB.
a. Define the characteristics that make up a Cournot duopoly.
b. Determine the reaction function for each firm.
c. Calculate each firm's equilibrium output and the market's equilibrium price.
c. If the market elasticity of demand is -1.33 and there are 3 firms in the industry rather than 2, what price is best for firm A to charge? Firm B?
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Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. Due to increase in the preference for light beer drinkers, Chris Prangel wants to introduce light beer version in Mountain Man. An analysis into the la..
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