Question

1. Consider a Cournot duopoly model with two firms, 1 and 2, selling the same product...

1. Consider a Cournot duopoly model with two firms, 1 and 2, selling the same product and facing the inverse market demand p(Q) = 270 - 4Q, where Q is the total quantity sold in the market. The firms have the same constant marginal cost c = 30. The firms simultaneously and independently decide how much to sell.

(e) Suppose the two firms for a cartel and agree to maximizes total profit and divide it equally. Find the each firm’s optimal output, the market price and each firm’s profit in this case

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