Suppose Cournot duopolist firms operate with each having a cost ...

[Mollykgkg]

Suppose Cournot duopolist firms operate with each having a cost of 30qi (i = 1,2 ) so that each firm's marginal cost is 30. The inverse market demand curve is P = 120 - Q where Q = q1 + q2. Suppose there were no barriers to entry and firms continued to enter so long as there were positive economic profits. At the Nash-Cournot equilibrium, the price, P, is
 
  A) 30.
  B) 45.
  C) 60.
  D) 90.

Question 2

After Hurricane Katrina destroyed much of the infrastructure of the United States Gulf Coast,
 
  A) labor became more valuable.
  B) labor became less valuable because of the capital that had been destroyed.
  C) labor became less valuable because FEMA's response wasn't timely.
  D) labor became more valuable because of the rebuilding effort.

[elyse44]

Answer to Question 1

A

Answer to Question 2

B