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Suppose That the Reaction Functions for Two Identical Cournot Firms

Question 12

Multiple Choice

Suppose that the reaction functions for two identical Cournot firms are given by the equations q1 = 50 !3q2 and q2 = 50 !3q1. If the market demand for the output of these two firms is qT = 125 !5p, the market price of this product is:


A) $0
B) $10
C) $12.50
D) $20
E) $25

Correct Answer:

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