Home » Two firms, firm 1 amp; firm 2, in a Cournot duopoly are facing the market demand given by P = 140 – 0.4 Q , where P is the market price and Q is the…

# Two firms, firm 1 amp; firm 2, in a Cournot duopoly are facing the market demand given by P = 140 – 0.4 Q , where P is the market price and Q is the…

Two firms, firm 1 & firm 2, in a Cournot duopoly are facing the market demand given by P = 140 – 0.4Q, where P is the market price and Q is the market quantity demanded. Firm 1 uses old technology and has (total) cost of production given by C(q1) = 200 + 15q1, where q1 is the quantity produced by firm 1. Firm 2 has managed to introduce a new technology to lower the per unit cost, and its (total) cost of production is now given by C(q2) = 200 + 10q2, where q2 is the quantity produced by firm 2.

Find

1. Equilibrium price in the Cournot duopoly equilibrium.
2. Equilibrium quantity produced by firm 1 in the Cournot duopoly equilibrium.
3. Equilibrium quantity produced by firm 2 in the Cournot duopoly equilibrium.
4. Equilibrium market quantity in the Cournot duopoly equilibrium.
5. Deadweight loss in the Cournot duopoly equilibrium.

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