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Q2) Two firms produce a homogeneous good. The market demand is given by Q(p) = 20 - p, and the cost function is TC(q) =
Q2) Two firms produce a homogeneous good. The market demand is given by Q(p) = 20 - p, and the cost function is TC(q) = q. (Same for both firms.) Suppose the two firms compete in the style of Bertrand by simultaneously choosing their prices. The prices must be whole numbers. Verify that there are two Nash equilibria: #1: Both firms choose P = 1; #2: Both firms choose P = 2.
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