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Question 1 (70 Points): Car Detailing Duopoly Adam and Ben are the only two providers of car detailing in town. Adam's demand function can be
Question 1 (70 Points): Car Detailing Duopoly Adam and Ben are the only two providers of car detailing in town. Adam's demand function can be written as qA = 200 - PA + PB, whereas Ben's demand function can be written as qB = 200 - PB + PA, where qA/B denotes car detailing jobs done per month by Adam/Ben and PA/B denotes the price Adam/Ben charges per job. Adam and Ben use the same technology so that they have symmetric cost structures: MCA = MCB = ATCA = ATCB = 40 for cleaning and waxing supplies, and implicit opportunity costs. A. (5 points) Are the car detailing services provided by Adam and Ben perfect substitutes for consumers? Explain your answer briefly. Car detailing services provided by Adam and Ben are:_ A. Perfect B. Imperfect C. Complements D. Indeterminate substitutes substitutes Your explanation here. B. (25 points) Suppose Adam and Ben compete on prices. Derive Adam and Ben's best responses. Show your calculation details. Fill in the blanks below. Adam's best response function: PA = Ben's best response function: PB = Your explanation and graph here. C. (10 points) Do Adam and Ben have any dominant strategies? Explain your answers briefly. Your answer (yes or no) here: Your explanation here. D. (15 points) Find the equilibrium prices and quantities for Adam and Ben. E. (15 points) Find Adam and Ben's producer surplus, respectively. Show your calculation and explain your answer briefly
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