H3 Economics Practice Questions - Singapore GCE Exam - H3 Economics Exam

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Two symmetric duopolists compete in quantities (Cournot competition) facing market inverse demand P = 120 - Q, where Q = q1 + q2. Both firms have constant marginal costs MC = 12 and no fixed costs. What is the Nash equilibrium output for each firm and the resulting market price?

Each firm produces 36 units; market price is 48 Each firm produces 54 units; market price is 12 Each firm produces 27 units; market price is 66 Each firm produces 40 units; market price is 40

Correct Answer:

Each firm produces 36 units; market price is 48

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