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To verify that you have found the correct reaction functions, compute the optimal q1 if q2=100, a=4, b=0.01, c1=2, and c2=1. (Note that this is
To verify that you have found the correct reaction functions, compute the optimal q1 if q2=100, a=4, b=0.01, c1=2, and c2=1. (Note that this is not necessarily an equilibrium.) B) Solve for the quantity produced by each firm and the equilibrium price. To verify that you have found the correct equilibrium, compute q1*, q2*, and p if a=4, b=0.01, c1=2, and c2=1. 2)Find the equilibrium price and the quantity produced by each firm if they compete in prices (Bertrand competition). (Assume the parameters given above.) B) In the three-firm case, what will be the equilibrium price and the total quantity produced in the market? To verify that you have found the correct equilibrium, compute p and Q if a=4, b=0.01, and c=2. In lecture we saw the Cournot competition model for two firms with the same cost function. Now, we are going to consider asymmetric cost functions. Assume that demand for a good is given by p = a- deQd is quantity demanded), and that there are 2 firms competing in quantities. Both have no fixed costs and a constant marginal cost. Firm 1 has a marginal cost C1, and firm 2 has a marginal cost C2. We have that a> ci > C2. 00 None of the above Now, let's go back to the case where all firms have the same cost function. In class we saw the Cournot competition model for two firms. Now, we are going to get you through the
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