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oligopolistic competition: Production comprises of 2 companies A and B. The annual demand (in thousands of...

oligopolistic competition:

Production comprises of 2 companies A and B. The annual demand (in thousands of sq feet) has been estimated as Q = 2400000 - 10000p. where p is price per 1000 sq feet of product.

both firms have Marginal Cost of Production of $30 per 1000 sq feet.

a) Find equilibrium price and quantity

After a deal, company A has Marginal cost of production decreases to $22.50 per 1000 sq feet.

b) By how much would company A change its production and how will B react. Find new Market price of the product.

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Answer #1

This is a case of Cournot oligopolistic market

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