# Find the inverse demand in thi

Consider a duopoly market with 2 firms. Aggregate demand in this market is given by

Q = 500 – P,

where P is the price on the market. Q is total market output, i.e., Q = QA + QB, where QA is the output by Firm A and QB is the output by Firm B. For both firms, marginal cost is given by MCi = 20, i=A,B.

Assume the firms compete a la Cournot.

1. Find the inverse demand in this market.

Note that marginal revenue for both firms is given by

MRA=500-2QA-QB,

MRB=500-QA-2QB.

2.Describe what a best-response curve is and how to find it.

3. Derive the best-response function for each firm.

4. What are the equilibrium quantities?

5. What is the total quantity supplied on this market?

6. What is the equilibrium price in this market?

# Find the inverse demand in thi

Consider a duopoly market with 2 firms. Aggregate demand in this market is given by

Q = 500 – P,

where P is the price on the market. Q is total market output, i.e., Q = QA + QB, where QA is the output by Firm A and QB is the output by Firm B. For both firms, marginal cost is given by MCi = 20, i=A,B.

Assume the firms compete a la Cournot.

1. Find the inverse demand in this market.

Note that marginal revenue for both firms is given by

MRA=500-2QA-QB,

MRB=500-QA-2QB.

1. Describe what a best-response curve is and how to find it.
2. Derive the best-response function for each firm.
3. What are the equilibrium quantities?
4. What is the total quantity supplied on this market?
5. What is the equilibrium price in this market?

# Find the inverse demand in thi

Consider a duopoly market with 2 firms. Aggregate demand in this market is given by

Q = 500 – P,

where P is the price on the market. Q is total market output, i.e., Q = QA + QB, where QA is the output by Firm A and QB is the output by Firm B. For both firms, marginal cost is given by MCi = 20, i=A,B.

Assume the firms compete a la Cournot.

1. Find the inverse demand in this market.

Note that marginal revenue for both firms is given by

MRA=500-2QA-QB,

MRB=500-QA-2QB.

2. Describe what a best-response curve is and how to find it.

3. Derive the best-response function for each firm.

4. What are the equilibrium quantities?

5. What is the total quantity supplied on this market?

6. What is the equilibrium price in this market?

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