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Cournot model to calculate the equilibrium

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Consider two firms facing the demand curve P = 10 - Q, where Q = Q1 + Q2. The firms' Total Cost functions are C (Q) = 4 + 2Q.

A. What is each firm's equilibrium output and profit if they behave noncooperatively? Use the Cournot model to calculate the equilibrium.

B. How much should Firm 1 be willing to pay to purchase Firm 2 if collusion isillegal but a takeover is not? Hint: Firm 1 would have a monopoly position in the market.

Reference no: EM131266250

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