What is the deadweight loss in this market

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Cournot Duopoly). Suppose there are two firms, Firm 1 and Firm 2 in a market. Each firm simultaneously chooses a quantity of output to produce (q1 and q2). Total market output is given by Q = q1 + q2. The market demand curve determines the price to clear the market. Market demand is given by P = 112 – 4Q. Also, each firm produces at a constant marginal cost, MC = 16.

a) What is Firm 1’s Best Response function?

b) How much output will each firm produce in the Cournot-Nash equilibrium?

c) What is the deadweight loss in this market?

Reference no: EM131094496

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