part 4 5 6 Consider the following figure familiar from the lecture on differentiated oligopoly.ADP2FP2 -4HP1Valuation for Firm 1 (v1)Are the following statements true or false?1. When prices are p, and p2, consumers in areas B, C, D, F, G, and I purchase from Firm 1.2. When prices are p, and p,, consumers in area H do not buy from either Firm.3. When prices are p, and p2, consumers on the boundary between areas B and Careindifferent between purchasing the product from Firm 1 or Firm 2.4. Suppose Firm 1's price is fixed at p,. If Firm 2 changes its price from p, to p2 - 4, thenconsumers in areas E, F, and G will switch from buying from Firm 1 to buying from Firm 2.5. Suppose there are no consumers in areas A and B, but there are consumers in all the otherregions, and suppose that Firm 2's marginal cost is zero. Then p, cannot be profitmaximizing for Firm 2.Valuation for(Za) z w The demand curves for cases of Coke and Pepsi are given respectively byQe(Pc. Pe) = 200 - 10pc + 5pp.Qr (Pc. Pr) = 200 – 10pp + 5pc-Each firm has a marginal cost of $10 per case and must simultaneously choose their prices.Are the following statements true or false?6. If Pepsi charges less than Coke, then all customers will buy from Pepsi.7. Because Coke and Pepsi are substitutes, the best model for understanding this market is theCournot Competition Model.For the next question, note that Coke's revenue, as a function of price, isRe(Pc. Pp) = Pc(200 - 10pc + 5pp).8. Solving the equation(Pc. Pp) = 10apefor pe will yield Coke's best-response function.9. The best-response functions are p(Pp) = 15 + 0.25 p, and pp(Pc) = 15 + 0.25 pc-10. Both firms charging $20 is an equilibrium.

Firm: It refers to a business or an organization under which various works have been performed. The…

The demand curves for cases of Coke and Pepsi are given respectively by Qe (Pc. Pr) = 200 - 10pc + 5pr. Qr(Pc. Pr) = 200 - 10p, + Spc- Each firm has a marginal cost of $10 per case and must simultaneously choose their prices. Are the following statements true or false? 6. If Pepsi charges less than Coke, then all customers will buy from Pepsi.

The demand curves for cases of Coke and Pepsi are given respectively by Qe (Pc. Pr) = 200 - 10pc + 5pr. Qr(Pc. Pr) = 200 - 10p, + Spc- Each firm has a marginal cost of $10 per case and must simultaneously choose their prices. Are the following statements true or false? 6. If Pepsi charges less than Coke, then all customers will buy from Pepsi.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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