Two firms produce and sell differentiated products that are substitutes for each other. Their demand curves are Firm 1: Q, 40-3P,+ P, Firm 2: Q, 40 - 3P,+ P, Bolh firms have constant marginal costs of $5.00 per unit. Both fims set their own price and take their competitor's price as fixed. Use the Nash equilibrium concept to determine the equiltbrium set of prices. Since Ihe firms ane identical, they wil set the same prices and produce the same quantitias. In equibrium, each firm will charge a price of $ and produce units of output. (Enter your responses rounded to wo decimal places)

Two firms produce and sell differentiated products that are substitutes for each other. Their demand curves are Firm 1: Q, 40-3P,+ P, Firm 2: Q, 40 - 3P,+ P, Bolh firms have constant marginal costs of $5.00 per unit. Both fims set their own price and take their competitor's price as fixed. Use the Nash equilibrium concept to determine the equiltbrium set of prices. Since Ihe firms ane identical, they wil set the same prices and produce the same quantitias. In equibrium, each firm will charge a price of $ and produce units of output. (Enter your responses rounded to wo decimal places)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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