# What are the long-run equilibrium profits for Alex?

Suppose the market inverse demand curve is P = 70 2Q and there are two firms in the market one r Show more Suppose the market inverse demand curve is P = 70 2Q and there are two firms in the market one run by Alex and one run by Jean. Assume that both sellers can produce at constant MC=AC=10 and as far as the customers are concerned they are producing a homogenous product. a. If Alex and Jean compete as Bertrand competitors what will be the equilibrium price and market quantity? What are the long-run equilibrium profits for Alex? b. If Alex and Jean decide to merge and behave like a single-price monopolist what will be the monopolists equilibrium price and quantity? What would profits be? c. Now suppose that Alex and Jean compete as Cournot duopolists i. What is the formula for Alexs best response function? ii. What are the Cournot equilibrium quantities for Alex and Jean iii. What is the Cournot equilibrium price? iv. What would there profits be? 9 Show less

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