Asked by
Arely De La Torre
on Oct 14, 2024
Verified
suppose that two Cournot duopolists serve the Peoria-Dubuque route, and the demand curve for tickets per day is Q 160 2p (so p 80 Q/2) .Total costs of running a flight on this route are 400 20q, where q is the number of passengers on the flight.Each flight has a capacity of 80 passengers.In Cournot equilibrium, each duopolist will run one flight per day and will make a daily profit of
A) $800.
B) $400.
C) $200.
D) $160.
E) $1,600.
Cournot Duopolists
A market structure in which two companies assume the other's output to be constant when determining their optimal production levels.
Total Costs
The total of all expenses involved in creating goods or services, encompassing both constant and fluctuating costs.
Daily Profit
The net financial gain or loss a business experiences on a daily basis.
- Uncover the equilibrium level of output for entities engaged in a Cournot duopoly arrangement.
- Introduce the Cournot model to multiple market settings and demand function formats.
Verified Answer
FR
Learning Objectives
- Uncover the equilibrium level of output for entities engaged in a Cournot duopoly arrangement.
- Introduce the Cournot model to multiple market settings and demand function formats.