How many units will each firm produce

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Reference no: EM13981358

Two Cournot competitiors, Nick Limited(firm 1) and Junior LLC(firm 2), face an inverse demand curve p = 400 - 2q in the market (q = q1 + q2). Both producers have a marginal cost of $10 per unit.

A) What is the reaction function for Nick Limited?

B) How many units will each firm produce? What will they be the price in the market?

C) What if Nick Limited chooses first (Leader) and Junior LLC follows(follower). How many units will each firm produce then?

D) Will the consumers be better or worse off in the Stackleberg compared to the Cournot competition?

Reference no: EM13981358

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