Which of the following represents OilPro’s reaction curve?
]]>q_{O} = 22 – 0.5q_{G}
]]>P_{O} = 100 – 2q_{G} – 2q_{O}. OilPro’s residual marginal revenue starts at the same point but has twice the slope: *MR*_{O} = 100 – 2q_{G} – 4q_{O}. To maximize profit, equate OilPro’s residual marginal revenue with its *$12* marginal cost: *$12 = 100 – 2q*_{G} – 4q_{O}. Solve for q_{O} to find the reaction function: *q*_{O} = 22 – 0.5q_{G}. For further review see section “Oligopoly with Identical Goods: Cournot Competition”.
]]>q_{O} = 44 – q_{G}
]]>$12 marginal cost. Then, solve for *q*_{O}. OilPro’s residual demand is *P*_{O} = 100 – 2q_{G} – 2q_{O}. OilPro’s residual marginal revenue starts at the same point but has twice the slope: *MR*_{O} = 100 – 2q_{G} – 4q_{O}. To maximize profit, equate OilPro’s residual marginal revenue with its *$12* marginal cost: *$12 = 100 – 2q*_{G} – 4q_{O}. Solve for *q*_{O} to find the reaction function: *q*_{O} = 22 – 0.5q_{G}. For further review see section “Oligopoly with Identical Goods: Cournot Competition”.
]]>q_{G} = 20 – 0.5q_{O }
]]>q_{O}, as a function of GreaseTech’s output, *q*_{G}. To find the reaction function, find OilPro’s residual marginal revenue and equate it to OilPro’s *$12* marginal cost. Then, solve for *q*_{O}. OilPro’s residual demand is *PO = 100 – 2q*_{G} – 2q_{O}. OilPro’s residual marginal revenue starts at the same point but has twice the slope: *MR*_{O} = 100 – 2q_{G} – 4q_{O}. To maximize profit, equate OilPro’s residual marginal revenue with its *$12* marginal cost: *$12 = 100 – 2q*_{G} – 4q_{O}. Solve for *q*_{O} to find the reaction function: *q*_{O} = 22 – 0.5q_{G}. For further review see section “Oligopoly with Identical Goods: Cournot Competition”.
]]>q_{G} = 20 – q_{O}
]]>$12 marginal cost. Then, solve for *q*_{O}. OilPro’s residual demand is *P*_{O} = 100 – 2q_{G} – 2q_{O}. OilPro’s residual marginal revenue starts at the same point but has twice the slope: *MR*_{O} = 100 – 2q_{G} – 4q_{O}. To maximize profit, equate OilPro’s residual marginal revenue with its *$12* marginal cost: *$12 = 100 – 2q*_{G} – 4q_{O}. Solve for qO to find the reaction function: *q*_{O} = 22 – 0.5q_{G}.For further review see section “Oligopoly with Identical Goods: Cournot Competition”.
]]> Which of the following represents GreaseTech’s reaction curve?
]]>q_{O} = 20 – 0.5q_{G }
]]>q_{G}, as a function of OilPro’s output, *q*_{O}. To find the reaction function, find GreaseTech’s residual marginal revenue and equate it with GreaseTech’s *$20* marginal cost. Then, solve for *q*_{G}. GreaseTech’s residual demand is *PG = 100 – 2q*_{G} – 2q_{O}. Its residual marginal revenue is *MR*_{G} = 100 – 4q_{G} – 2q_{O}. To maximize profit, equate GreaseTech’s residual marginal revenue with its *$20* marginal cost: *$20 = 100 – 4q*_{G} – 2q_{O}. Solve for qG to find the reaction function: *q*_{O} = 20 – 0.5q_{G}. For further review see section “Oligopoly with Identical Goods: Cournot Competition”.
]]>q_{O} = 25 – 0.5q_{O}
]]>$20 marginal cost. Then, solve for *q*_{G},. GreaseTech’s residual demand is *PG = 100 – 2q*_{G} – 2q_{O}. Its residual marginal revenue is *MR*_{G} = 100 – 4q_{G} – 2q_{O}. To maximize profit, equate GreaseTech’s residual marginal revenue with its *$20* marginal cost: *$20 = 100 – 4q*_{G} – 2q_{O}. Solve for qG to find the reaction function: *q*_{O} = 20 – 0.5q_{G}. For further review see section “Oligopoly with Identical Goods: Cournot Competition”.
]]>q_{G} = 25 – q_{O }
]]>$20 marginal cost. Then, solve for *q*_{G}. GreaseTech’s residual demand is *PG = 100 – 2q*_{G} – 2q_{O}. Its residual marginal revenue is *MR*_{G} = 100 – 4q_{G} – 2q_{O}. To maximize profit, equate GreaseTech’s residual marginal revenue with its *$20* marginal cost: *$20 = 100 – 4q*_{G} – 2q_{O}. Solve for qG to find the reaction function: *q*_{G} = 20 – 0.5q_{G}. For further review see section “Oligopoly with Identical Goods: Cournot Competition”.
]]>q_{G} = 20 – 0.5q_{O}
]]>PG = 100 – 2q_{G} – 2q_{O}. Its residual marginal revenue is *MR*_{G} = 100 – 4q_{G} – 2q_{O}. To maximize profit, equate GreaseTech’s residual marginal revenue with its $20 marginal cost: *$20 = 100 – 4q*_{G} – 2q_{O}. Solve for *q*_{G} to find the reaction function: *q*_{G} = 20 – 0.5q_{G}. For further review see section “Oligopoly with Identical Goods: Cournot Competition”.
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