Assume the inverse demand function in a market is given byP(Q) = 500 - Qwhereis the total industry output, that is the sum of the output of all firms in the market.There are two firms (indexed by i = 1,2) who both have a cost of producing the goodgiven byc(qi) = 10 * qiThe two firms are competing in the Cournot manner, that is they choose theirquantities simultaneously in order to maximize profits.What is the best response of firm 1 if firm 2 chooses an output level of 200? (input awhole number:)The best response function of firm 1 with respect to firm 2's quantity choice takesthe form:91 (92) = w * (x − y * q2 z)where (w,x,y,z) are parameters of the problem. Solve for this best response functionand provide the product (w*x*y*z) in the next blank:What is the Nash Equilibrium quantity produced by firm 1?(round to the nearest whole number)

Market Demand function : P = 500 - Q => P = 500 - (q1 + q2 ) Where , Q = Total Quantity for two…

Answered: Assume the inverse demand function in a…

Assume the inverse demand function in a market is given by P(Q) = 500 – Q where Q is the total industry output, that is the sum of the output of all firms in the market.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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