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ACME, intermediate microeconomics B quantities simultaneously without knowing the choice of their opponent, but both firms know the inverse demand function and each other's cost
ACME, intermediate microeconomics
B quantities simultaneously without knowing the choice of their opponent, but both firms know the inverse demand function and each other's cost functions. a) Derive both firms' best response functions and draw these in a diagram. (8 points) b) What quantities will each firm produce in the equilibrium? Illustrate these quantities in the diagram from a). What is the total quantity produced and what is the equilibrium price? (7 points) Now assume that ACME sets its quantity before BETA, and that BETA can observe ACME's choice before choosing its own quantity yB . c) What quantities will the firms produce in the new equilibrium? Show your calculations. If you were the social planner and wanted to maximize theStep by Step Solution
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