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Derive their reaction functions

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Reference no: EM131334776

The Corleone and Chung families are the only producers of good h in the United States. The market demand for good h is h=1200-20p. The costs of production for each of them are represented by the cost functions C1(h1) = 10h1 and C2(h2) = 20h2, respectively. Suppose both families must choose their output levels simultaneously.

a) Derive their reaction functions.

b) Calculate the Cournot equilibrium in this market. Indicate output levels, market price, and individual profits.

Reference no: EM131334776

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