Suppose that there are two firms producing an identical product for sale in the same market. The
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Suppose that there are two firms producing an identical product for sale in the same market. The market demand for the product is given by the equation Q = 1,200 − P.
Each firm has a marginal cost of MC = 0. Neither firm incurs a fixed cost.
Firms 1 and 2 have 200 units and 300 units of capacity, respectively.
a. What is the Bertrand-Nash equilibrium?
b. What is each firm’s profit?
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Related Book For
Managerial Economics: Tools For Analyzing Business Strategy
ISBN: 307174
1st Edition
Authors: Thomas J Webster
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