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Solve the question and explain in detail Q3) Two firms A and B are competing in the same market and incur fixed production cost of

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Q3) Two firms A and B are competing in the same market and incur fixed production cost of $10 (consider variable costs equal to zero). Both firms face following demand: DA=204PA+PBDA=204PB+PA Here, PA and PB are the unit product price for the firm A and the firm B respectively. (i) If both firms compete in the market, then calculate reaction curve of each firm, (ii) What should be the equilibrium price and optimal profit at Nash Equilibrium for each firm, (iii) In case of collusion, what price firms would charge and how much profit will they make at Nash Equilibrium? (iv) Compare competitive versus collusion scenario and comment

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