The inverse demand for tea is given by P = 12 - 0.03Q, where Pis the price per a gram of tea and Qis the total number of grams oftea brought to market. There are two tea shops in the market. Shop 1's cost function is given by C = 0.02q12, where q, is the numberof grams of tea it brings to market. Shop 2's cost function is given by C2 0.02q22, where q2 is the number of grams of tea it brings tomarket. Given that the two shops compete by setting output (Cournot), answer the following.%3Da) Identify shop 1's reaction function to shop 2's output to within 2 decimal places (e.g. 0.33).91=|数字数字92b) Identify shop 2's reaction function to shop 1's output to within 2 decimal places (e.g. 0.71).92= 数字数字91c) To within two decimal places (e.g. 0.63) what is the equilibrium output level of each shop and the equilibrium per gram price for tea.grams of tea and shop 2 will produce数字grams of tea. The equilibrium market price is £Shop 1 will produce 7数字

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The inverse demand for tea is given by P = 12 – 0.03Q, where Pis the price per a gram of tea and Qis the total number of grams of tea brought to market. There are two tea shops in the market. Shop 1's cost function is given by C =0.02q,2, where q1 is the number of grams of tea it brings to market. Shop 2's cost function is given by C2 =0.02q2, where q2 is the number of grams of tea it brings to market. Given that the two shops compete by setting output (Cournot), answer the following. a) Identify shop 1's reaction function to shop 2's output to within 2 decimal places (e.g. 0.33). 91=数字数字 92 b) Identify shop 2's reaction function to shop 1's output to within 2 decimal places (e.g. 0.71). 92=数字数字 91 c) To within two decimal places (e.g. 0.63) what is the equilibrium output level of each shop and the equilibrium per gram price for tea. grams of tea and shop 2 will produce grams of tea. The equilibrium market price is £ Shop 1 will produce 7 数字

The inverse demand for tea is given by P = 12 – 0.03Q, where Pis the price per a gram of tea and Qis the total number of grams of tea brought to market. There are two tea shops in the market. Shop 1's cost function is given by C =0.02q,2, where q1 is the number of grams of tea it brings to market. Shop 2's cost function is given by C2 =0.02q2, where q2 is the number of grams of tea it brings to market. Given that the two shops compete by setting output (Cournot), answer the following. a) Identify shop 1's reaction function to shop 2's output to within 2 decimal places (e.g. 0.33). 91=数字数字 92 b) Identify shop 2's reaction function to shop 1's output to within 2 decimal places (e.g. 0.71). 92=数字数字 91 c) To within two decimal places (e.g. 0.63) what is the equilibrium output level of each shop and the equilibrium per gram price for tea. grams of tea and shop 2 will produce grams of tea. The equilibrium market price is £ Shop 1 will produce 7 数字

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter11: Profit Maximization

Section: Chapter Questions

Problem 11.4P

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