Suppose there are two pharma companies (A and B) vying to develop the first vaccine to cure AIDS.Assume a fixed MC across the two firms MCA = MCB = 4. Assume further that they both face a marketdemand of P = 12 -0.00004Q and Q=QA +QB.Assume firm B's reaction function is: QB = 125,000 - 0.5QA. Compute for:Firm A's Revenue or RAFirm A's Marginal revenue MROutput for firm A or QA and output for firm B or QBMarket Q* and P*

Under imperfect competition, each firm owns a market share which gives it the power to influence the…

Answered: Assume firm B's reaction function is:…

Assume firm B's reaction function is: QB = 125,000-0.5QA. Compute for: Firm A's Revenue or R₁ Firm A's Marginal revenue MRA Output for firm A or QA and output for firm B or QB Market Q* and P*

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Suppose there are two pharma companies (A and B) vying to develop the first vaccine to cure AIDS.
Assume a fixed MC across the two firms MCA = MCB = 4. Assume further that they both face a market
demand of P = 12 -0.00004Q and Q=QA +QB.
Assume firm B's reaction function is: QB = 125,000 - 0.5QA. Compute for:
Firm A's Revenue or RA
Firm A's Marginal revenue MR
Output for firm A or QA and output for firm B or QB
Market Q* and P*

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