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2. There are two firms (A and B) that produce differentiated products. Both firms have a constant marginal cost of c =10 and market demand

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2. There are two firms (A and B) that produce differentiated products. Both firms have a constant marginal cost of c =10 and market demand is given by the following set of equations QA =200 - 2PA + PB Q B =240 +2 PA - 4PB a. Suppose thatthe two firms compete in prices and both firms choose their prices simultaneously What is the Nash Equilibriumof this game? b. Suppose thatthe two firms compete in prices and thatfirm A sets their price before firm B. Whatis the subgame perfect equilibriumof this game? Whatare the resultingequilibriumprices

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