Two firms (A and B) engage in Bertrand competition. There are 150 people in the population, each of whom is willing

to pay at most 19 for at most one unit of the good. (they only want to buy 1 good each)

Both firms have a constant marginal cost of 8. Each firm is initially allocated half the market.

a) [4 points] What is the Bertrand equilibrium? What price will be charged? How much profit will each firm make?

If instead, the constant marginal cost of both firms was: 3 for firm A and 5 for firm B.

b) [4 points] What is the Bertrand equilibrium? What price will be charged by each firm? How much profit will each firm make? How much product will each firm sell?

If instead the constant marginal cost of both firms was: 3 for firm A and 5 for firm B and that firm A and B had fixed cost of 0 and 1,140, respectively.

c) [2 points] What is the Bertrand equilibrium? What price will be charged by each firm? How much profit will each firm make? How much product will each firm sell? (hard)