Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Consider a market with aggregate demand 100439 if pg25 9(1)): 1 0 if p>25 There are two rms. Each rm 1's cost function is c1(q1)
Consider a market with aggregate demand 100439 if pg25 9(1)): 1 0 if p>25 There are two rms. Each rm 1's cost function is c1(q1) = %q1 and rm 2's cost function is 020112) = %q2. 2. Suppose the firms act as " Cournot-Nash Duopolists", simultaneously and independently choosing their output quantities. If firms 1 and 2 choose output quantities q1 2 0 and q2 2 0 respectively, then the market clearing price would be given by the inverse demand function evaluated at the total quantity, P(q1 + 92). (a) Find the payoff functions for both firms, that is compute 71(91, 92) and 72(91, 92). (b) Find the best responses for the first firm, B1(q2), and the best response for the second firm, B2(q1)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started