Consider a market with two firms (Firm 1 and Firm 2), which produce an identical good. Both firms have the same constant marginal cost: MC = m = 40. The demand in this market is given by: Q = 100.25p ⇒p = 400 - 4Q Let p₁, 9₁, and ₁ denote the price charged by firm 1, the quantity firm 1 produces and sells, and firm 1's profits, respectively. Analogously, let p₂, 9₂, and ₂ denote the price, quantity, and profits of firm 2. When appropriate, assume the firms split total quantity and profits evenly. Question 01 Assume Firm 1 and Firm 2 compete by choosing prices simultaneously (Bertrand oligopoly with identical products). Find the price, quantity, and profit of each firm in equilibrium. Which of the following alternatives is correct? (a) P₁ = P2 = $220, 9₁ 92 = 22.5, and ₁ = ₂ = $4,050 (b) p₁ = $160, p₂ = $220,q₁ = 60, q2 = 0, ₁ = $7,200, and #₂ = $0 (c) P₁ = P₂ = $160,9₁ =q2 = 30, and ₁ = ₂ = $3,600 (d) P₁ = P₂ = $40,9₁ = 9₂ = 45, and ₁ = ₂ = $0

Consider a market with two firms (Firm 1 and Firm 2), which produce an identical good. Both firms have the same constant marginal cost: MC = m = 40. The demand in this market is given by: Q = 100.25p ⇒p = 400 - 4Q Let p₁, 9₁, and ₁ denote the price charged by firm 1, the quantity firm 1 produces and sells, and firm 1's profits, respectively. Analogously, let p₂, 9₂, and ₂ denote the price, quantity, and profits of firm 2. When appropriate, assume the firms split total quantity and profits evenly. Question 01 Assume Firm 1 and Firm 2 compete by choosing prices simultaneously (Bertrand oligopoly with identical products). Find the price, quantity, and profit of each firm in equilibrium. Which of the following alternatives is correct? (a) P₁ = P2 = $220, 9₁ 92 = 22.5, and ₁ = ₂ = $4,050 (b) p₁ = $160, p₂ = $220,q₁ = 60, q2 = 0, ₁ = $7,200, and #₂ = $0 (c) P₁ = P₂ = $160,9₁ =q2 = 30, and ₁ = ₂ = $3,600 (d) P₁ = P₂ = $40,9₁ = 9₂ = 45, and ₁ = ₂ = $0

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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