Question

Assume that there are two firms A and B in a duopoly market. Firm B supplies zero output. Firm A realizes that maximum demand in the market is 20 units, and he supplies half of it, i.e., 10 units. Construct a table the different steps showing the quantity supplied by the firms.

Answer 1

Step	Firm	Quantity supplied
1	B	0
2	A	1/2 x 20 = 20/2 = 10
3	B	1/2 (20 - 1/2 x 20) = 20/2 - 20/4
4	A	1/2(20 - 1/2(20 - 1/2 x 20))
5	B	1/2(20-1/2(20 - 1/2(20 - 1/2 x 20)))