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Explain clearly Two firms A and B compete in a Bertrand duopoly environment and sell a homogeneous product. The (inverse) market demand curve is given
Explain clearly
Two firms A and B compete in a Bertrand duopoly environment and sell a homogeneous product. The (inverse) market demand curve is given as P = 86 - 2Q1 - 2Q2. The total cost for the two firms are given by TC1 = 6Q1 and TC2 = 6Q2. Which of the following is true?
A. The Best Response Function for firm 1 is given by Q1 = 13 - 0.5Q2
B. The price of the product will be different for the two firms based on their relative market power
C. The price of the product will converge to $86
D. The price of the product will converge to $6
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