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Suppose two firms produce an identical product at zero marginal cost and face the demand curve P = 50 – Q a.
If the firms behave as Cournot duopolists, what quantity do they produce?
What is the total quantity produced by a perfectly competitive market?
What is the monopoly (collusion) quantity?
Graph the duopolists reaction curves and identify the Nash equilibrium, the monopoly outcome, and the competitive outcome.
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