Two companies produce similar items for the same market. Company 1 produces q₁items and Company 2 produces q2 items. The costs C₁ and C₂ incurred by Company 1and Company 2, respectively, are given by C₁ = 79₁ and C₂ = 1092, and the market priceP is given by P = 100-91-92. Let ₁ and 2 denote the profits made by Company 1and Company 2, respectively. Each company wants to choose its production strategy inorder to maximize its profit.(a) Find expressions for ₁ and ₂ in terms of 9₁ and 92.(b) Find the solution of this problem, using the Cournot model.

Given information Demand function P=100-q1-q2 C1=7q1--- firm 1's cost C2=10q2-- firm 2's cost Firm…

Two companies produce similar items for the same market. Company 1 produces q₁ items and Company 2 produces q2 items. The costs C₁ and C₂ incurred by Company 1 and Company 2, respectively, are given by C₁ = 79₁ and C₂ = 1092, and the market price P is given by P = 100 q1 q2. Let ₁ and 2 den ote the profits made by Company 1 and Company 2, respectively. Each company wants to choose its production strategy in order to maximize its profit. (a) Find expressions for ₁ and ₂ in terms of q₁ and 92. (b) Find the solution of this problem, using the Cournot model.

Two companies produce similar items for the same market. Company 1 produces q₁ items and Company 2 produces q2 items. The costs C₁ and C₂ incurred by Company 1 and Company 2, respectively, are given by C₁ = 79₁ and C₂ = 1092, and the market price P is given by P = 100 q1 q2. Let ₁ and 2 den ote the profits made by Company 1 and Company 2, respectively. Each company wants to choose its production strategy in order to maximize its profit. (a) Find expressions for ₁ and ₂ in terms of q₁ and 92. (b) Find the solution of this problem, using the Cournot model.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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