Intermediate Microeconomic

Jackson Yi

Consider the market for steel which is made of two identical firms (U.S. Steel and Bethlehem) which have identical marginal costs of $5. The demand for steel is QD = 80 − 4P

(a) Suppose the firms compete ala Cournot. What is the equilibrium price and quantity for each firm?

(b) Suppose the firms acted as a collusive cartel. What is the equilibrium price and quatinty for the combined firms?

(c) Suppose the firms compete ala Bertrand. What is the equilibrium price and quantity for each firm?

    • 10 years ago
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