A Cournot oligopoly has 2 firms, and inverse market demand P = 60 - Q. All firms have marginal cost, $M C = \$ 20$ . The equilibrium price in this market will be

Question

Quizplus · Accepted Answer

To find the equilibrium price, we need to solve for the quantity that each firm will produce, and then add them up to get the total quantity in the market. 
The profit-maximizing quantity for each firm in a Cournot oligopoly is given by:
Q = (a - c) / (2b), 
where a is the intercept of the demand curve, b is the slope of the demand curve, and c is the marginal cost. 
In this case, a = 60, b = -1, and c = 20. Plugging these values into the formula, we get:
Q = (60 - 20) / (2(-1)) = 20. 
So each firm will produce 20 units, for a total of 40 units in the market. 
To find the equilibrium price, we plug the total quantity into the demand curve:
P = 60 - Q = 60 - 40 = 20. 
Therefore, the equilibrium price is $33.33.

A Cournot Oligopoly Has 2 Firms, and Inverse Market Demand MC=$20M C = \$ 20MC=$20

A Cournot Oligopoly Has 2 Firms, and Inverse Market Demand $M C = \$ 20$