In Problem 5, Suppose That Grinch and Grubb Go into the Wine

In Problem 5, suppose that Grinch and Grubb go into the wine business in a small country where wine is difficult to grow. The demand for wine is given by p = $360 - .2Q, where p is the price and Q is the total quantity sold. The industry consists of just the two Cournot duopolists, Grinch and Grubb. Imports are prohibited. Grinch has constant marginal costs of $75 and Grubb has marginal costs of $15. How much Grinch's output in equilibrium?

A) 562.50
B) 187.50
C) 750
D) 375
E) 1,125

Correct Answer:

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