What would be the profit of each firm

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Question: The dancing machine industry is a duopoly. The two firms, Chuckie B Corp. and Gene Gene Dancing Machines, compete through Cournot quantity-setting competition. The demand curve for the industry is ?? = 100 - ??, where Q is the total quantity produced by Chuckie B and Gene Gene. Currently, each firm has marginal cost of $40 and no fixed cost. Find the equilibrium price, quantity produced by each firm, and the profit of each firm. Now suppose the two firms were to form a cartel. What would be the quantity produced by each firm in the cartel agreement? What would be the profit of each firm? Suppose that Chuckie B was considering cheating on the cartel agreement and it guesses that Gene Gene is going to stick to the cartel agreement. What is the profit maximizing output of Chuckie B in that case? Is the cartel sustainable?

Reference no: EM133454239

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