Assume that two companies (A and B) are duopolists who produce identical products. Demand for the products is given by the following linear demand function:

Assume that two companies (A and B) are duopolists who produce identical products. Demand for the products is given by the following linear demand function:

p = 200 − Q_A-Q_B

where Q_A and Q_B are the quantities sold by the respective firms and P is the selling price. Total cost functions for the two companies are

TC_A=1500+55Q_A+〖Q^2〗_A
TC_B=1200+20Q_B+2〖Q^2〗_B

Assume that the firms act independently as in the Cournot model (i.e., each firm assumes that the other firm’s output will not change).

a. Determine the long-run equilibrium output and selling price for each firm.

b. Determine Firm A, Firm B, and total industry profits at the equilibrium solution found in Part (a).
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