Suppose a firm A produces a product q, but also pollution x that affects a second firm B. Firm A is a competitive firm and faces an equilibrium price of £12 for its product. The cost function of firm A is CA (q,x) = q^2 + (x - 4)^2 . Firm B is a competitive firm and faces an equilibrium price of £10. Firm B’s cost function is CB (r,x) = r^2 + xr.A. Compute the equilibrium prices and quantities and the profits of the two separate, competitive firms. Interpret the first order conditions. Explain. 8.a) Suppose a firm A produces a product q, but also pollution x that affects a second firm B.Firm A is a competitive firm and faces an equilibrium price of £12 for its product. The costfunction of firm A is С₁(q, x) = q² + (x − 4)². Firm B is a competitive firm and faces anequilibrium price of £10. Firm B's cost function is CÂ(r, x) = r² + xr. Compute the equilibriumprices and quantities and the profits of the two separate, competitive firms. Interpret the firstorder conditions. Explain.

Cost function of firm A Ca (q,x) = q^2 + (x - 4)^2 P=12 Cost function of firm B Cb (r,x) = r^2 +…

Answered: Suppose a firm A produces a product q,…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose a firm A produces a product q, but also pollution x that affects a second firm B. Firm A is a competitive firm and faces an equilibrium price of £12 for its product. The cost function of firm A is CA (q,x) = q^2 + (x - 4)^2 . Firm B is a competitive firm and faces an equilibrium price of £10. Firm B’s cost function is CB (r,x) = r^2 + xr.

A. Compute the equilibrium prices and quantities and the profits of the two separate, competitive firms. Interpret the first order conditions. Explain.

8.
a) Suppose a firm A produces a product q, but also pollution x that affects a second firm B.
Firm A is a competitive firm and faces an equilibrium price of £12 for its product. The cost
function of firm A is С₁(q, x) = q² + (x − 4)². Firm B is a competitive firm and faces an
equilibrium price of £10. Firm B's cost function is CÂ(r, x) = r² + xr. Compute the equilibrium
prices and quantities and the profits of the two separate, competitive firms. Interpret the first
order conditions. Explain.

Definition Video Definition Point where the demand and supply curves intersect. At the equilibrium price the quantity supplied of a good is equal to the quantity demanded. When the market is not in equilibrium, market surplus or market shortage occurs. The region that is above the price equilibrium indicates market surplus and the region below the price equilibrium indicates market shortage. Video

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