Suppose that identical duopoly firms have constant marginal costs of $10 per unit. Firm 1 faces a demand function of q1 = 70 – 2p1 + 1p2, where q, is Firm 1's output, p4 is Firm 1's price, and p, is Firm 2's price. Similarly, the demand Firm 2 faces is 92 = 70 – 2p2 + 1p1. Solve for the Bertrand equilibrium. In equilibrium, p, equals $ and p, equals $ (Enter numeric responses using integers.)

Suppose that identical duopoly firms have constant marginal costs of $10 per unit. Firm 1 faces a demand function of q1 = 70 – 2p1 + 1p2, where q, is Firm 1's output, p4 is Firm 1's price, and p, is Firm 2's price. Similarly, the demand Firm 2 faces is 92 = 70 – 2p2 + 1p1. Solve for the Bertrand equilibrium. In equilibrium, p, equals $ and p, equals $ (Enter numeric responses using integers.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Here is a market with three firms: 1, 2, and 3. The demand curve is P=100-Q. There is no fixed cost but the marginal cost 10 for all firms. Firm 1 is a leader firm so that it decides the quantity Q1 first. Then two firms respectively decide their quantities Q2 and Q3 simultaneously. 1) At an equilibrium (SPE), Q1 is Q2=Q3= 2) At the equilibrium, (the market quantity) Q= and (the market price) P= 3) The profit of firm 1 is while the profit of firm 2 and 3 respectively is
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