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Suppose there are two firms competing in a market. Both firms have the cost function c(x) = 10x/2 while the demand function is given by
Suppose there are two firms competing in a market. Both firms have the cost function c(x) = 10x/2 while the demand function is given by x(p) = 100 - 0.1p.
(a) Find the profit maximizing quantity and price if the firms are playing a pricing game. (3 marks)
(b) What will be the price charged and the quantity produced if the firms' strategy is quantity? How much profit each firm make? ( 15 marks)
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