The Inverse Demand for Designer Blankets Is Given by P

Multiple Choice

The inverse demand for designer blankets is given by P = 40 - 0.01Q, where P is the price per blanket and Q is the total number of blankets brought to market. Two shops in the market supply specialty blankets. Shop 1's cost function is given by C₁ = 0.02q₁², where q₁ is the number it brings to market. Shop 2's cost function is given by C₂ = 0.02q₂², where q₂ is the number it brings to market. Given that the two shops compete by setting output (Cournot) , the equilibrium market price is $____.

A) 32.65
B) 30.76
C) 28.58
D) 23.43