Question
Suppose there are two firms in a market producing the same homogeneous product. Firm A has a fixed cost of $100 and a variable cost
Suppose there are two firms in a market producing the same homogeneous product. Firm A has a fixed cost of $100 and a variable cost of $10 per unit of output, while firm B has a fixed cost of $60 and a variable cost of $20 per unit of output. The market demand curve is given by P = 100 - Q, where Q is the total quantity of the product produced by both firms and P is the market price.
1. Find the profit-maximizing output level for each firm.
2. Find the equilibrium price and quantity in the market.
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Microeconomics
Authors: Douglas Bernheim, Michael Whinston
2nd edition
73375853, 978-0073375854
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