Question

consider a market for energy drinks consisting of only one firm. The firm has a linear cost function: C(q)=4q where q represents quantity produced by the firm. The market inverse demand function is given by P(Q)=24-2Q, where Q represent total industry output. Based on the given information answer the following:(i) now suppose a second firm enters the market. The second firm has an identical cost function. What will be the Cournot equilibrium output for each firm?(ii) what is the Stackelberg equilibrium output for each firm if firm 2 enters second?(iii) How much profit will each firm make in the Cournot game? How much in Stackelberg?(iv) Which type of market do consumers prefer: monopoly, Cournot duopoly or Stackelberg duopoly? Why?​

Answer 1

Answer:

the marginal cost function C' (q)=4q−1 = p to get q = p/4+1/4. ... The second firm has an identical cost function. ... What is the Stackelberg equilibrium output for each firm if firm 2 enters