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Questions › JNU › JNU SIS 2021 › Q16
0 marksMicroeconomics › Monopolistic competition and oligopoly › Cournot competitionModerateabout 2 min

JNU SIS 2021 Question 16: Monopolistic competition and oligopoly

Consider the Cournot duopoly model, where inverse demand is given by P(Q)=100−Q,Q=q1+q2P(Q) = 100 - Q, Q = q_1 + q_2P(Q)=100−Q,Q=q1​+q2​. Let the marginal costs of two firms be c1=30c_1 = 30c1​=30 and c2=55c_2 = 55c2​=55. Determine the Nash equilibrium of the game.

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Consider the Cournot duopoly model, where inverse demand is given by P(Q) = 100 - Q, Q = q₁ + q₂. Let the marginal costs of two firms be c₁ = 30 and c₂ = 55. Determine the Nash equilibrium of the game. (A) q₁ = q₂ = 70/3 (B) q₁ = 95/3, q₂ = 20/3 (C) q₁ = 45, q₂ = 20 (D) None of the above

Also written as: Consider the Cournot duopoly model, where inverse demand is given by P(Q) = 100 - Q, Q = q_1 + q_2. Let the marginal costs of two firms be c_1 = 30 and c_2 = 55. Determine the Nash equilibrium of the game.

Monopolistic competition and oligopoly has come up 104 times in 7 exams since 2004.

What this question tests

This question is on Cournot competition, part of Monopolistic competition and oligopoly in Microeconomics.

Firms choosing quantities simultaneously, reaction curves, and equilibrium as the number of firms or costs change.

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