You believe that you have a costless monopoly. Given your estimate of the one day demand for mushrooms: Q_m = 1500 - 200P_m,where Q_m = servings of fried mushroom and gravy. If another booth opens next to yours also selling fried mushroom and gravy, but demand remains as above assume the product is undifferentiated), each of you would generate $1,250 in revenue under the Cournot assumption.

Question

Quizplus · Accepted Answer

Under the Cournot assumption, each firm produces the same quantity, and the market price is determined by the sum of the two firms' outputs. In this case, each firm would produce 500 servings of fried mushroom and gravy, and the market price would be $10. Therefore, each firm would generate $1,250 in revenue.

You Believe That You Have a Costless Monopoly