1. Two firms compete as a duopoly. The demand they face is P = 100 - 3Q. The cost function for each firm is C(Q) = 4Q.
A. Determine output, and profits for each firm in a Cournot oligopoly
B. If firms collude, determine output and profit for each firm
C. If firm 1 cheats, determine output and profit for each firm
D. Graph the reaction functions and identify the points from parts A, B and C.
2. Two firms compete as a duopoly. The demand they face is P = 80 - 2Q. The cost function for firm 1 is C(Q) = 4Q and for firm 2 is C(Q) = 3Q.
A. Determine output, and profits for each firm in a Cournot oligopoly
B. Determine output, and profits for each firm in a Stackelberg oligopoly