Profit maximization
5:00
Profit maximization
Feb 19, 2019
Khan Academy
Given Market demand was given by P = 400 - 2Q. Each firm has a cost function given by Ci = 40Qi. Where QL is the output of the leader and QF is the output of the follower. We need to analyse the situation by first considering the situation for the follower, in keeping with the ‘fold back’ method discussed earlier. It is essentially acting in the same way as a Cournot duopolistic. Find profit function of cournot duopolistic for each Firms and optimum price and quantity for each.
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