Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I am having issues understanding these assignments. Would you please add commentary for your rational if possible. Thank you! 1.-There are only two firms in

I am having issues understanding these assignments. Would you please add commentary for your rational if possible. Thank you!

image text in transcribed
1.-There are only two firms in the market, Firms A and B, producing differentiated products. Specifically, the demands for the two firms' products are given by qA = 30 -2pA + ps and qs = 15 -2ps + PA, where p; denotes the price charged by Firm / and q denotes the resulting number of units that will be purchased from Firm i. Each firm can produce as much as it chooses, at zero marginal cost. The firms compete in prices. (a) Draw the two firms' reaction functions in a diagram with p, and p2 on the axes. (b) (Using calculus) Determine the equilibrium prices and quantities. (c) Now suppose firms choose quantities, instead of prices. Obtain the system of inverse demand functions, and then the equilibrium choices of output, and compare the results with what you obtained in (b)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Principles

Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak

7th Canadian Edition Volume 2

1119048478, 978-1119048473

Students also viewed these Economics questions