Consider a model of imperfect competition in which Firms 1, 2, and 3 choose theirprices P₁, P2, and p3 simultaneously, with the demand for their products given byX₁1 (P₁, P2, P3) = 3 - 2p₁ +2p2,X₂(P1₁, P2, P3) = 6 - 4p2 + 2p₁ +X3 (P1, P2, P3) = 3 - 2p3 + 2p2-2p3,The firms have constant marginal costs c₁ = 2, C₂ = 5, and c3 = 2.(a) Express each firm's profits as a function of the three price choices.(b) Write each firm's first-order condition for profit maximization.(c) Compute the equilibrium prices and each firm's equilibrium profits.I

Profits are defined as the revenue that the priducer earns over and above the cost that is incurred…

(a) Express each firm's profits as a function of the three price choices. (b) Write each firm's first-order condition for profit maximization. (c) Compute the equilibrium prices and each firm's equilibrium profits.

(a) Express each firm's profits as a function of the three price choices. (b) Write each firm's first-order condition for profit maximization. (c) Compute the equilibrium prices and each firm's equilibrium profits.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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