1. The cement making industry is a duopoly, with two firms, Hardfast and Quikrok, operating under conditions of Cournot competition. The demand curve for the industry is P¼200Q, where Q is total industry output in thousands of tons per day. Both firms have a marginal cost of £50 per ton and no fixed costs. Calculate the equilibrium price, outputs and profits of each firm.

2. A market consists of two firms, Hex and Oct, which produce a differentiated product. The firms’ demand functions are given by: 

QH = 100 2PH + PO

QO = 80 – 2.5PO + PH 

Hex has a marginal cost of £20, while Oct has a marginal cost of £15. Calculate the Bertrand equilibrium prices in this market.

3. Examine the problem on property rights and fishing; how is the situation affected if the cost of catching fish increases from £0.10 to £0.20 per fish?