Two firms are competing in a Bertrand setting. The demand and costs equations are: Q1 = 88–4P1+2P2, Q2 = 88–4P2+2P1; MC1 = 9; and MC2 = 10. The firms agreed to collude. But firm 1 sets a P-Duopoly. Instructions: Use no decimals. a. Under these conditions, P1 = $ P2 = $ b. Calculate each firm's equilibrium output. Q1 = Q2 = c. Calculate the profit each firm earns in equilibrium. Firm 1: $ Firm 2: $
-
Two firms are competing in a Bertrand setting. The demand and costs equations are: Q1 = 88–4P1+2P2, Q2 = 88–4P2+2P1; MC1 = 9; and MC2 = 10. The firms agreed to collude. But firm 1 sets a P-Duopoly.
Instructions: Use no decimals.
a. Under these conditions,
P1 = $
P2 = $
b. Calculate each firm's equilibrium output.
Q1 =
Q2 =
c. Calculate the profit each firm earns in equilibrium.
Firm 1: $
Firm 2: $
d. In this case,
A. Firm 1 was exposed to deception, and should have entered the market with P-
Monopoly .B. Firm 2 was exposed to deception, and should have entered the market with P-Monopoly.
C. Firm 2 was exposed to deception, and should have entered the market with P-Duopoly.
D. Firm 1 was dishonest, and soon will be ostracized by the industry.
![](/static/compass_v2/shared-icons/check-mark.png)
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
![Principles of Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781305585126/9781305585126_smallCoverImage.gif)
![Managerial Economics: A Problem Solving Approach](https://www.bartleby.com/isbn_cover_images/9781337106665/9781337106665_smallCoverImage.gif)
![Managerial Economics & Business Strategy (Mcgraw-…](https://www.bartleby.com/isbn_cover_images/9781259290619/9781259290619_smallCoverImage.gif)