Reference no: EM131240805
let market demand in the trinkets industry be given by Q(P) = 55−P. There are only two firms in the industry, and the total cost function for each firm be given by C(qi) = 10 + 25q, where i = 1, 2. 1. Find each firm’s Cournot-Nash equilibrium output, profit, and the resulting equilibrium price in the market.
1. Suppose that, observing profits made by incumbent firms, 6 new firms, identical to the first two, enter the market as Cournot competitors. How do equilibrium prices, quantities, and profits change? (Note: now there are 8 identical firms competing in the market for trinkets).
2. Are consumers better off? In other words, does their consumer surplus rise, fall, or stay the same? Explain your answer.
3. A ninth and identical firm is thinking about entering the market too. Explain why it will, upon further reflection, decide not to do so.
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Let market demand in the trinkets industry
: let market demand in the trinkets industry be given by Q(P) = 55−P. There are only two firms in the industry, and the total cost function for each firm be given by C(qi) = 10 + 25q, where i = 1, 2. 1. Find each firm’s Cournot-Nash equilibrium output,..
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