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Consider two firms producing homogeneous goods. Firm 1 and firm 2 simultaneously set outputs q, and q,. The inverse demand is P =20-3 (q, +
Consider two firms producing homogeneous goods. Firm 1 and firm 2 simultaneously set outputs q, and q,. The inverse demand is P =20-3 (q, + q,) and both firms have marginal costs of 2. In a Nash equilibrium, the firms produce O a. Each of the other suggestions might occur in a Nash equilibrium Ob. (q),92 ) = (1.5,3) Oc. (q),92) = (3, 1.5) O d. (q ; , 9 ; ) = (2, 2 )
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