Question
5. Consider a industry has two firms which produce heterogeneous goods y and y2. Suppose each having marginal costs equal to zero and the
5. Consider a industry has two firms which produce heterogeneous goods y and y2. Suppose each having marginal costs equal to zero and the consumers' inverse demand functions are given by P1 = 20 - 2y1 - y2 P2 = 20 - Y1 - 292 (a) (10%) Show the Cournot equilibrium output for firm 1. (b) (10%) Show the Bertrand equilibrium price for y.
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a Firm 1s profit is 1 P1Y1 20 2Y1 Y2Y1 Firm 2s profit is 2 P2Y2 20 Y1Y2 FOCs 1Y1 20 2Y1 Y2 2Y1 0 2...Get Instant Access to Expert-Tailored Solutions
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Microeconomics An Intuitive Approach with Calculus
Authors: Thomas Nechyba
1st edition
538453257, 978-0538453257
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