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North Bend currently has one McDonald's fast-food franchise. Demand for hamburgers in North Bend is given
by Q = 300 - 10P. Any McDonald's franchise has costs of C = 70 + 2Q for producing Q hamburgers.
a. What is the monopolist's price, quantity and profits?
b. A second McDonald's franchise moves into North Bend and both behave as Cournot duopolists. Calculate the price, and the quantities produced by each franchise.
c. How does price and total quantity in Cournot (part b) compare to the numbers you calculated in a monopoly (part a)?
d. Calculate the profit of the original McDonald's. Compare the Cournot profit to that in part a.
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