Suppose the firms compete in quantities

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Suppose that market demand for golf balls is described by Q = 90 - 3P, where Q is measured in kilos of balls. There are two firms that supply the market.

Firm 1 can produce a kilo of balls at a constant unit cost of $15 whereas firm 2 has a constant unit cost equal to $10.

a) Suppose the firms compete in quantities. How much does each firm sell in a Cournot equilibrium? What is the market price and what are the firms' profits?

b) Suppose the firms compete in price. How much does each firm sell in a Bertrand equilibrium? What is market price and what are the firms' profits?

Reference no: EM132264291

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