Suppose there are two firms,Boors and Cudweiser,each selling identical-tasting nonalcoholic beer.Consumers of this beer have no brand loyalty so market demand can be expressed as $P = 5 - .001 \left( Q _ { B } + Q _ { C } \right)$ .Boors' marginal revenue function can be written $M R = 5 - .001 \left( 2 Q _ { B } + Q _ { C } \right)$ and symmetrically for Cudweiser. Boors operates with out-of-date technology and has constant cost of $4 per unit $( M C = A C = 4 )$ whereas Cudweiser has constant cost of $2 per unit. Assuming thefirmsbehave as Cournot competitors,in the Nash equilibrium,Cudweiser will produce

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In a Cournot competition, each firm decides its quantity based on the quantity produced by the other firm. The Nash equilibrium occurs when both firms are producing quantities such that neither can increase profit by unilaterally changing its own production level. Given the marginal revenue (MR) and marginal cost (MC) for both firms, we can set MR equal to MC for each firm to find the equilibrium quantities. For Cudweiser, with a cost of $2, and given Boors' cost and the demand function, solving the system of equations derived from setting MR equal to MC for both firms leads to Cudweiser producing 3,333 units in the Nash equilibrium.

Suppose There Are Two Firms,Boors and Cudweiser,each Selling Identical-Tasting Nonalcoholic P=5−.001(QB+QC)P = 5 - .001 \left( Q _ { B } + Q _ { C } \right)P=5−.001(QB​+QC​)

Suppose There Are Two Firms,Boors and Cudweiser,each Selling Identical-Tasting Nonalcoholic $P = 5 - .001 \left( Q _ { B } + Q _ { C } \right)$