26 Jul WHAT CAPACITY WILL COGS WELL BUILD?
Lopez Industries has developed a new product called Gizmo and now must decide whether to build a fac Show more Lopez Industries has developed a new product called Gizmo and now must decide whether to build a factory with the capacity to produce one or two units of the Gizmo. Its total cost function is CA=8qA + q2A. Acme estimates market demand will be Q=10-0.5P. Lopez expects that its rival Cogswell Cogs will very soon develop a copy-cat version of Gizmo and will very likely build a factory to produce either one or two units of their version as well. Total demand Q = qA + qC. Acme knows that Cogswell will have the same costs as it does and will play as a Cournot duopolist. What capacity will Lopez build? What capacity will Cogs well build? Show less
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