Essay
Consider a market with just one firm.The demand in the market is p = 18 - Q and the firm has a linear cost function C(Q)= 2Q.
a.How much output will this firm produce.What will be the profit and consumers surplus?
b.Suppose a second firm with the same cost function enters the market and the two firms compete in a Cournot style (simultaneous output choice).What will be the equilibrium price and quantity in the market? What is the total market profit and CS?
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