1. Suppose firm 1 and firm 2 each produce

the same product and face a market demand

curve described byQ = 5000 200P. Firm

1 has a unit cost of production c1 equal to

6 whereas firm 2 has a higher unit cost of

production c2 equal to 10.

a. What is the Bertrand-Nash equilibrium

outcome?

b. What are the profits of each firm?

c. Is this outcome efficient?

from question no 1c, how do we explain that the outcome is not efficient