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Bhagaban Sethi
on Dec 01, 2024

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An industry has two firms.The inverse demand function for this industry is p = 74 - 4q.Both firms produce at a constant unit cost of $26 per unit.What is the Cournot equilibrium price for this industry?

A) $21
B) $29
C) $42
D) $26
E) None of the above.

Cournot Equilibrium Price

A concept in economics where competing firms reach a state of balance in which each firm's output decision is optimal, given the output decisions of other firms, leading to a stable price level in oligopolistic markets.

Constant Unit Cost

Constant unit cost occurs when the cost to produce each additional unit of a product remains the same, regardless of the level of production.

Inverse Demand Function

A function that reflects the relationship between the price of a good and the quantity demanded, solving for price as a function of quantity.

  • Identify equilibria in a range of oligopolistic market structures, embracing Cournot and Stackelberg competitions.
  • Assess the influence of various cost frameworks on enterprise operations and market results.
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Cassandra J HinojosaDec 02, 2024
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