Determine the reaction curve for each of firm

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Suppose a second firm enters the market, producing the same product. The total quantity supplied in the market is now the sum of the two producers, a Cournot Duopoly – that is:

Q = (Q₁ + Q₂)

Beginning with the Inverse Demand curve determined in question 1(a) above – re-write the Inverse demand curve taking into account the two firms.

Determine the equations for each firm’s Total Revenue, TR and for each firm’s Marginal Revenue, MR.

Determine the Reaction Curve for each of Firm 1 and Firm 2 given that the Marginal Cost, MC for each firm is equal to zero (0).

Determine the Cournot Duopoly Equilibrium quantity for each firm and the Equilibrium Price.

Suppose that the Marginal Cost for each firm is NOT zero (0) but rather MC = $5.00. Determine the NEW Cournot Duopoly Equilibrium quantity for each firm and the Equilibrium Price.

Reference no: EM131084789

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