Equilibrium Quantities in Oligopoly Market

What are the equilibrium quantities produced by the two firms in an oligopoly market?

Data: The demand function is Q = 120 - P, and the cost functions are C1(Q1) = 10Q1 and C2(Q2) = 10Q2.

Equilibrium Quantities:

Firm 1's profit maximization condition: MR1 = MC1 120 - 2Q1 = 10 2Q1 = 110 Q1 = 55 Firm 2's profit maximization condition: MR2 = MC2 120 - 4Q2 = 10 4Q2 = 110 Q2 = 27.5

In oligopoly market, the equilibrium quantities produced by the two firms are 55 units for Firm 1 and 27.5 units for Firm 2. This is determined by setting the marginal revenue (MR) equal to the marginal cost (MC) for each firm individually. Firm 1 chooses its quantity based on its own cost function and demand function, without considering Firm 2's quantity. Similarly, Firm 2 makes its decision independently based on its own cost and demand functions.

Equilibrium in an oligopoly market is achieved when each firm's output quantity is the best response to the output quantity chosen by the other firm. In this case, the equilibrium quantities are 55 units for Firm 1 and 27.5 units for Firm 2, based on the given demand and cost functions.