Suppose the demand in a certain duopoly market with homogenous goods is Q^d = 8,000 - 100P.The two firms in the market are firm V and firm W,and the marginal cost of producing the goods in question is equal to $25.Which of the following describes the Nash equilibrium in this market? A) Q_V + Q_W = 2,750 B) One of the firms produces 5,500 units of output, and one of the firms does not produce. C) Q_V = Q_W = 5,500 D) Q_V = Q_W = 2,750

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Quizplus · Accepted Answer

In a duopoly with homogeneous goods and a linear demand curve, the Nash equilibrium occurs when both firms produce at a level where their combined output maximizes joint profits given the marginal cost. The equilibrium output for each firm is equal when marginal costs are constant and identical for both firms, leading to an equal distribution of the total market output between the two firms.

Suppose the Demand in a Certain Duopoly Market with Homogenous