Figure 8.8
-Figure 8.8 shows demand, marginal revenue, and costs of an individual duopolist. If the two duopolists have the same costs and split the market equally, each profit maximizing duopolist will produce and sell a quantity of ________.

Question

Quizplus · Accepted Answer

Each duopolist will produce where marginal revenue equals marginal cost, which is at a quantity of 250 units. At this quantity, the market price is $5, which is equal to the marginal cost for both firms. Splitting the market equally, each duopolist will produce and sell 250/2 = 125 units. This quantity maximizes profits for both firms in this scenario.

Figure 8.8 -Figure 8.8 Shows Demand, Marginal Revenue, and Costs of an of an Individual