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Let us consider a market with two firms being present

Economics Jan 02, 2022

Let us consider a market with two firms being present. We are given the following information about the market. 1) Its demand curve is presented as: P= 230-2 Where: P-price Q-quantity demanded 2) Total Cost function for each firm is: TC = 500 = Where: Q-firm's quantity 3) Two firms represent Cournot model since they simultaneously choose quantities. QUESTION: With the given information, provide explanation of firms' incentives to prevent entering price war. List and explain actions that these two firms can take to avoid potential price wars?

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