Cournot Problem. Consider a Cournot oligopoly with two identical firms. These firms each have constant marginal costs of $10. The market for these firms’ product has demand Q = 100 - P.

-Refer to Cournot Problem.Each firm will produce.

Question

Cournot Problem. Consider a Cournot oligopoly with two identical firms.  These firms each have constant marginal costs of $10. The market for these firms’ product has demand Q = 100 - P.

-Refer to Cournot Problem.Each firm will produce.

Quizplus · Accepted Answer

In a Cournot problem, each firm will try to maximize its profit by assuming the output of the other firm to be constant. The optimal output for each firm is where marginal revenue equals marginal cost. Given the demand function and cost function in the problem, the optimal output for each firm will be 30 units. Therefore, the best choice is option B.