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Two firms Apple and Samsung in the smart phone market have combined demand given by Q = 200 – P. Their total costs are given by TC Apple = 4 Q Apple + Q 2 Apple and TC Samsung = 4 Q Samsung + Q 2 Samsung . If they cannot successfully collude and instead produce where the market price equals marginal cost, their total output will be

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ogorwyne

The total output of both smart phones company would be 98.

How to solve for output

The combined demand is

Given, Q = 200 - P

Therefore P = 200 - Q

Q = Qa + Qs

P = 200 - QA - QS

For apple, We have

4 Q Apple + Q² Apple

and

4 Q Samsung + Q² Samsung

4 Q + Q² A

= 4 + 2QA

Then 200 - QA - QS = 4 + 2QA

Take like terms

3QA + QS = 196 --- eqn 1

For samsung we do the same thing till we arrive at

QA + 3QS = 196 --- eqn 2

Solve eqn 1 and 2 simultaneously

We would have QA = 49 and Qs = 49

Total output is the addition of both values

49 + 49 = 98

How to solve for total output

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