Duopolists A and B face the following demand curves: Q_A = 100 - 2P_A + 5P_B and Q_B = 120 - 3P_B + 4P_A.If both firms have zero marginal cost,what are the profit-maximizing prices and quantities? A) P_A = 300, Q_A = 600, P_B = 220, Q_B = 660. B) P_A = 200, Q_A = 400, P_B = 200, Q_B = 400. C) P_A = 200, Q_A = 700, P_B = 200, Q_B = 320. D) P_A = 300, Q_A = 750, P_B = 250, Q_B = 570. E) P_A = 300, Q_A = 1,250, P_B = 350, Q_B = 270.

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Quizplus · Accepted Answer

The profit-maximizing prices and quantities are found by solving the following system of equations:Q_A = 100 - 2P_A + 5P_BQ_B = 120 - 3P_B + 4P_AP_A = MC_A = 0P_B = MC_B = 0Solving this system of equations gives:P_A = 300Q_A = 600P_B = 220Q_B = 660

Duopolists a and B Face the Following Demand Curves: QA

Duopolists a and B Face the Following Demand Curves: Q_A