Suppose there are two duopolists that have fixed costs of $ 60, variable costs of $ 10, and have the same demand curves: Q1 = 36 - 2P1 + P2 Q2 = 36 - 2P2 + P1 P1 and P2 = P Q1 and Q2 = Q Each company chooses its own price and takes the competitor's price as fixed a. Determine the profit equation and the profit value b. Calculate the reaction curves for firm 1 and firm 2 c. Perform the Nash equilibrium determined in the competition model with differentiated products.

Suppose there are two duopolists that have fixed costs of $ 60, variable costs of $ 10, and have the same demand curves: Q1 = 36 - 2P1 + P2 Q2 = 36 - 2P2 + P1 P1 and P2 = P Q1 and Q2 = Q Each company chooses its own price and takes the competitor's price as fixed a. Determine the profit equation and the profit value b. Calculate the reaction curves for firm 1 and firm 2 c. Perform the Nash equilibrium determined in the competition model with differentiated products.

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter10: Monopolistic Competition And Oligoply

Section: Chapter Questions

Problem 18SQ

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