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1. Firm 1 and Firm 2 are two producers of widgets. Each firm produces its own widget type at a constant unit cost c, = £15 and c, = £30, for Firm 1 and Firm 2 respectively. The market prices for the two goods are determined by the inverse demand functions: P,(4,4,)=200-2q, q, P,(4,4.)=200-q, 2q, where q,and q, are quantities of the two varieties produced by Firm 1 and 2, respectively. Firms compete on quantity and can choose any quantity level. (a) Define the best reply functions of the firms; (b) Find the quantities produced in equilibrium and prices at which the goods are sol%;

1. Firm 1 and Firm 2 are two producers of widgets. Each firm produces its own widget type at a constant unit cost c, = £15 and c, = £30, for Firm 1 and Firm 2 respectively. The market prices for the two goods are determined by the inverse demand functions: P,(4,4,)=200-2q, q, P,(4,4.)=200-q, 2q, where q,and q, are quantities of the two varieties produced by Firm 1 and 2, respectively. Firms compete on quantity and can choose any quantity level. (a) Define the best reply functions of the firms; (b) Find the quantities produced in equilibrium and prices at which the goods are sol%;

Advanced Engineering Mathematics
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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1. Firm 1 and Firm 2 are two producers of widgets. Each firm produces its own widget type at a constant unit cost c, = £15 and c, = £30, for Firm 1 and Firm 2 respectively. The market prices for the two goods are determined by the inverse demand functions: p,(4,4,)=200-2q,-q, P,(4,4,)=200-q,-2q, where q,and q, are quantities of the two varieties produced by Firm 1 and 2, respectively. Firms compete on quantity and can choose any quantity level. (a) Define the best reply functions of the firms; (b) Find the quantities produced in equilibrium and prices at which the goods are sold;
Transcribed Image Text:1. Firm 1 and Firm 2 are two producers of widgets. Each firm produces its own widget type at a constant unit cost c, = £15 and c, = £30, for Firm 1 and Firm 2 respectively. The market prices for the two goods are determined by the inverse demand functions: p,(4,4,)=200-2q,-q, P,(4,4,)=200-q,-2q, where q,and q, are quantities of the two varieties produced by Firm 1 and 2, respectively. Firms compete on quantity and can choose any quantity level. (a) Define the best reply functions of the firms; (b) Find the quantities produced in equilibrium and prices at which the goods are sold;
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