Suppose that in the Cournot market of worked-out problem 19.1 (page 712), the demand doubles at each price. What are the new equilibrium quantities and market price? How do profits change when the demand doubles?
Problem 19.1
Suppose Joe, Louie, and Rebecca compete in the Bertrand ready-mix concrete market described in Section 19.2. Show that in any Nash equilibrium, all sales must occur at a price of $40 (equal to marginal cost). Extend your argument to show that this statement will be true as long as two or more firms are competing in the market.