Consider a Cournot duopoly with the following inverse demand function: P = 100 ? 2Q1 ? 2Q2. The firms' marginal costs are identical and are given by MCi(Qi) = 2Qi. Based on this information, firm 1 and 2's reaction functions are:
A. r1(Q2) = 24.5 ? 0.5Q1 and r2(Q1) = 24.5 ? 0.5Q2.
B. Q1 = 49 ? 0.25Q2 and Q2 = 49 ? 0.25Q1.
C. r1(Q2) = 24.5 ? 0.5Q2 and r2(Q1) = 24.5 ? 0.5Q1.
D. Q1 = 49 ? 0.5Q2 and Q2 = 49 ? 0.5Q1.
Answer: C
You might also like to view...
Which of the following would not be considered a fixed cost for a law firm?
a. paper for the photocopy machine b. property taxes c. insurance premiums d. license fees e. interest on loans
Most economists believe that the classical model is the appropriate model for analysis of the economy in the
a. long run, because evidence indicates that money is not neutral in the long run. b. long run, because real and nominal variables are essentially determined separately in the long run. c. short run, because money is neutral in the short run. d. short run, because real and nominal variables are not highly intertwined in the short run.
A decrease in the price of pizza will lead to a(n):
A. increase in the demand for pizza. B. decrease in the number of consumers. C. decrease in the quantity of pizza demanded. D. increase in the quantity of pizza demanded.
Foreign aid:
A. provided by developed countries to developing countries represents about 10 percent of the GDP of developed countries. B. is an important source of funding for investment in most developing countries. C. does not contribute much to domestic investment in most developing countries. D. is largely wasted in most developing countries because it comes with no strings attached.