Question
The demand for shoes is given by Q = 10 - P, where Q is the quantity demanded for pairs of shoes. There are two
The demand for shoes is given by Q = 10 - P, where Q is the quantity demanded for pairs of shoes. There are two firms: one that sells right shoes and the other that sells left shoes. Let P1 be the price charged by the right-shoe producer and P2 be the price charged by the left-shoe producer. Of course, consumers still want to buy a pair of shoes (a right one and a left one). The marginal cost of the right-shoe producer is $1 per shoe, and the marginal cost of the left-shoe producer is $1 per shoe. What is the Bertrand equilibrium price of shoes? How many pairs of shoes are purchased?
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