VisiCalc, the first computer spreadsheet program, was released to the public in 1979. A year later, introduction
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To illustrate the competitive process in markets dominated by few firms, assume that a two-firm duopoly dominates the market for spreadsheet application software, and that the firms face a linear market demand curve
P = $1,250 - Q
Where P is price and Q is total output in the market (in thousands) . Thus Q = QA + QB. For simplicity, also assume that both firms produce an identical product, have no fixed costs and marginal cost MCA = MCB = $50. In this circumstance, total revenue for Firm A is
TRA = $1,250QA - QA2 - QAQB
Marginal revenue for Firm A is
MRA = ∂TRA/∂QA = $1,250 - $2QA - QB
Similar total revenue and marginal revenue curves hold for Firm B.
A. Derive the output reaction curves for Firms A and B.
B. Calculate the Court not market equilibrium price-output solutions.
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