Suppose the price reaction function for Mars' chocolate bars is Pm = (Vm+cm)/2)+0.5Ph, where Pm is the average price of Mars bars and Ph is the average price of Hershey brand chocolate bars. Likewise, the price reaction function for Hershey bars is Ph = (Vh+ch)/2 +0.5Pm. %3D Vm=Vh = 1.5 and the marginal cost for producing chocolate bars for both firms is $.50. What will each bar sell for?
Suppose the price reaction function for Mars' chocolate bars is Pm = (Vm+cm)/2)+0.5Ph, where Pm is the average price of Mars bars and Ph is the average price of Hershey brand chocolate bars. Likewise, the price reaction function for Hershey bars is Ph = (Vh+ch)/2 +0.5Pm. %3D Vm=Vh = 1.5 and the marginal cost for producing chocolate bars for both firms is $.50. What will each bar sell for?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![Suppose the price reaction function for Mars' chocolate
bars is Pm = (Vm+cm)/2)+0.5Ph, where Pm is the average
price of Mars bars and Ph is the average price of Hershey
brand chocolate bars. Likewise, the price reaction
function for Hershey bars is Ph = (Vh+ch)/2 +0.5Pm.
%3D
Vm=Vh = 1.5 and the marginal cost for producing
%3D
chocolate bars for both firms is $.50. What will each bar
sell for?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc511ec99-b539-46f9-a735-36c42af6ff14%2F394c0519-0bc7-40b1-b0f5-68b0bb0abef2%2Foxjwogx_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Suppose the price reaction function for Mars' chocolate
bars is Pm = (Vm+cm)/2)+0.5Ph, where Pm is the average
price of Mars bars and Ph is the average price of Hershey
brand chocolate bars. Likewise, the price reaction
function for Hershey bars is Ph = (Vh+ch)/2 +0.5Pm.
%3D
Vm=Vh = 1.5 and the marginal cost for producing
%3D
chocolate bars for both firms is $.50. What will each bar
sell for?
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