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both questions please 2. Suppose there are two firms, Boors and Cudweiser, each selling nonalcoholic beer. Suppose Boors and Cudweiser are NOT viewed as homogenous
both questions please 2. Suppose there are two firms, Boors and Cudweiser, each selling nonalcoholic beer. Suppose Boors and Cudweiser are NOT viewed as homogenous but rather demand for Boors is QB = 5000 - 1000P7 +100Pc and demand for Cudweiser is Qc = 3000 - 1500Pc + 100Pg. For simplicity, assume zero marginal costs. a. What is the Bertrand best response function for Boors? (5 points) b. What is the Bertrand best response function for Cudweiser? (5 points) c. How many units of the good will Boors produce and what price will it charge if this duopoly operated under Bertrand Competition? (5 points) d. How many units of the good will Cudweiser produce and what price will it charge if this duopoly operated under Bertrand Competition? (5 points) 3. Suppose the demand functions for differentiated goods supplied by a duopoly are: 91 = 50 +0.5P2-2P. 42 = 50 +0.5P-2P a. Find the inverse demand curves for the two firms, if this duopoly operated under Cournot competition? Hint: In Inverse demand curves, price is expressed as a function of quantities. (10 points) b. If the marginal revenue (MR) curves for two firms under Cournot competition with differentiated goods are: MR1 = 280 - 291-92 and MR2 = 180-292-91 Assume marginal costs (MC) is $40 for both firms. i. Find the best response functions for each firm. (5 points) II. Find the quantities of the good that each firm will supply (s points)
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