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The dancing machine industry is a duopoly The two firms Chuckie B Corp and Gene Gene Dancing Machines compete through Cournot quantity-setting competition The demand curve for the industry is

The dancing machine industry is a duopoly. The two firms, Chuckie B Corp. and Gene Gene Dancing Machines, compete through Cournot quantity-setting competition. The demand curve for the industry is P= 120-Q, where Qis the total quantity produced by Chuckie B and Gene Gene. Currently, each firm has marginal cost of $60 and no fixed costs.

a.What is the equilibrium price, quantity, and profit for each firm?

b.Chuckie B Corp. is considering implementing a proprietary technology with a one-time sunk cost of $200. Once this investment is made, marginal cost will be reduced to $40. Gene Gene has no access to this or any other cost saving technology, and its marginal cost will remain at $60. Should Chuckie B invest in the new technology

May 15 2020 View more View Less

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