Find quantity produced by each firm in a cournot equilibriu

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Suppose two firms 1 and 2 compete in quantities and face a demand curve p = 100 - q. Suppose firm 1 has a constant marginal cost of 10 while firm 2 has a constant marginal cost of 40. Suppose they produce quantities simultaneously.

a. Find quantity produced by each firm in a Cournot equilibrium.

b. Find the market price and the consumer surplus. Suppose the firms merge, and form a single new firm that will operate at a constant marginal cost of 10.

c. Find the price charged by this new, single firm.

d. Find the consumer surplus at this new price. Is it higher or lower than above?

Reference no: EM13185807

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