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4) Consider 2 hotels that are engaged in Betrand-style duopoly by setting prices. Suppose that market demand can be written as P=200Q where the quantity
4) Consider 2 hotels that are engaged in Betrand-style duopoly by setting prices. Suppose that market demand can be written as P=200Q where the quantity Q is the number rooms. The marginal cost of providing a room is constant and given by MC = 50. As usual, assume that consumers choose the hotel with the lowest price, and if the hotels set the same price then each will bookg rooms. a) What price do we expect each firm to choose? How many rooms will each firm book and how many rooms will be booked in total
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