Asked by
Dwayne Correia
on Dec 01, 2024
Verified
Suppose that two airlines are Cournot duopolists serving the Peoria-Dubuque route, and the demand curve for tickets per day is Q = 220 - 2p (so p = 110 - Q/2) .Total costs of running a flight on this route are 1,400 + 20q, where q is the number of passengers on the flight.Each flight has a capacity of 80 passengers.In Cournot equilibrium, each duopolist will run one flight per day and will make a daily profit of
A) $400.
B) $800.
C) $220.
D) $700.
E) $3,000.
Demand Curve
An illustrative chart that depicts how the demand for a product varies with changes in its price.
Total Costs
The overall expenditure on the production of goods or services, covering both fixed and variable costs.
Flight Capacity
The maximum number of passengers or the amount of cargo that an airline can transport in a given period.
- Determine the balance in diverse oligopoly market configurations, including Cournot and Stackelberg contests.
- Examine how different cost structures influence the actions of firms and the results within the market.
Verified Answer
EB
Learning Objectives
- Determine the balance in diverse oligopoly market configurations, including Cournot and Stackelberg contests.
- Examine how different cost structures influence the actions of firms and the results within the market.