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.Total industry output will be

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.Total industry output will be

Quizplus · Accepted Answer

In the Cournot problem, the total industry quantity can be calculated by adding the quantities of the two firms at their best response level. From the reaction functions of the firms, we get:

Q1 = (90 - Q2) / 3
Q2 = (90 - Q1) / 3

Solving these equations simultaneously, we get Q1 = Q2 = 30. Therefore, the total industry output is 60 units. Thus, the best choice is C.