A small town has two bakeries, Acme and Fat Apple. Acme's marginal cost to make a loaf of bread is $1 and Fat Apple's marginal cost is $2. Acme's demand function is given as Q₁ = 14-P₁- 0.5P2 and Fat Apple's demand function is Q2 = 19-0.5P1 P2 where P₁ (P2) is Acme (Fat Apple)'s price in dollars per loaf of break and Q₁ (Q2) is measured in thousand loaves of Amce (Fat Apple)'s bread (respectively). Find Nash equilibrium prices. O P1 10.2 and P2 = 9.2. P15.2 and P2 = 9.2. P1 4.4 and P2 = 8.2. P1 5.5 and P2 9.

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A small town has two bakeries, Acme and Fat Apple. Acme's marginal cost to make loaf of bread is $1 and Fat Apple's marginal cost is $2. Acme's demand function is given as Q₁ = 14 - P₁ -
0.5P2 and Fat Apple's demand function is Q2 = 19 -0.5P1 - P2 where P₁ (P2) is Acme (Fat Apple)'s price in dollars per loaf of break and Q₁ (Q2) is measured in thousand loaves of Amce (Fat
Apple)'s bread (respectively). Find Nash equilibrium prices.
O
O
O
P1 = 10.2 and P2 = 9.2.
P1 = 5.2 and P2 = 9.2.
P1 = 4.4 and P2 = 8.2.
P1 = 5.5 and P2 = 9.
Transcribed Image Text:A small town has two bakeries, Acme and Fat Apple. Acme's marginal cost to make loaf of bread is $1 and Fat Apple's marginal cost is $2. Acme's demand function is given as Q₁ = 14 - P₁ - 0.5P2 and Fat Apple's demand function is Q2 = 19 -0.5P1 - P2 where P₁ (P2) is Acme (Fat Apple)'s price in dollars per loaf of break and Q₁ (Q2) is measured in thousand loaves of Amce (Fat Apple)'s bread (respectively). Find Nash equilibrium prices. O O O P1 = 10.2 and P2 = 9.2. P1 = 5.2 and P2 = 9.2. P1 = 4.4 and P2 = 8.2. P1 = 5.5 and P2 = 9.
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