Kate and Alice are small-town ready-mix concrete duopolists. The market demand f

Question

Kate and Alice are small-town ready-mix concrete duopolists. The market demand function is Qd = 20,000 - 200P, where P is the price of a cubic yard of concrete and Qd is the number of cubic yards demanded per year. Marginal cost is $80 per cubic yard. The Cournot model describes the competition in this market. Which of the following best represents Kate's inverse residual demand function?

P(QK) = (100 - 0.005QA) - 0.005QK P(QK) = (100 - 0.005QK) - 0.005QA P(QK) = (200 - 0.005QA) - 0.005QK P(QK) = (200 - 0.005QA) - 0.005QA

Explanation / Answer

B P(QK) = (100 - 0.005QK) - 0.005QA

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