Two companies produce similar items for the same market. Company 1 produces 91 items and Company 2 produces q2 items. The costs, C₁ and C₂, incurred by Company 1 and Company 2, respectively, are given by C₁ = aq₁ and C₂ = aq₂. and the market price P is given by P = A-9₁-92, where a and A are positive real numbers with a < A. Let T₁ and 2 denote the profit made by Company 1 and Company 2, respectively. Both companies want to choose their production strategies in order to maximize their respective profits. (i) Find expressions for ₁ and ₂ in terms of q₁. 92. a and A. (ii) Find the solution of this problem using the Cournot model, giving your answers in terms of a and A. (iii) Find the solution of this problem using the Stackelberg model with Company 1

Two companies produce similar items for the same market. Company 1 produces 91 items and Company 2 produces q2 items. The costs, C₁ and C₂, incurred by Company 1 and Company 2, respectively, are given by C₁ = aq₁ and C₂ = aq₂. and the market price P is given by P = A-9₁-92, where a and A are positive real numbers with a < A. Let T₁ and 2 denote the profit made by Company 1 and Company 2, respectively. Both companies want to choose their production strategies in order to maximize their respective profits. (i) Find expressions for ₁ and ₂ in terms of q₁. 92. a and A. (ii) Find the solution of this problem using the Cournot model, giving your answers in terms of a and A. (iii) Find the solution of this problem using the Stackelberg model with Company 1

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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