Two firms (1 and 2) produce homogeneous goods and compete in the same industry, each with constant marginal cost c1 = 2, c2= 3. The inverse aggregate demand function is P (Y)=100-Y, where Y =y1+y2 is the total output. (a) Firm 1 is more efficient and it is the quantity leader. Solve for the Quantity-Leader equilibrium price, outputs, and profits for each firm.

Two firms (1 and 2) produce homogeneous goods and compete in the same industry, each with constant marginal cost c1 = 2, c2= 3. The inverse aggregate demand function is P (Y)=100-Y, where Y =y1+y2 is the total output. (a) Firm 1 is more efficient and it is the quantity leader. Solve for the Quantity-Leader equilibrium price, outputs, and profits for each firm.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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