Posted: September 16th, 2017

ECO – Consider a two­ firm industry (duopoly)

Consider a two­ firm industry (duopoly). The two firms, SL Machines and GG Machines, compete through
Cournot quantity­setting competition. The demand curve for the industry is P=100­Q, where Q is the total
quantity produced by SL and GG. Currently, each firm has marginal cost of $40 and no fixed cost. Show that the equilibrium price is $60, with each firm producing 20 machines and earning profits of $400.

Please show your work.

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