Essay
Suppose two Bertrand firms produce similar but not identical products. Their demand curves follow.
Firm A: qA = 10 - 3PA + PB
Firm B: qB = 10 - 3PB + PA
Assume that marginal cost is zero for both firms.
a. Graph each firm's reaction function and identify the Nash equilibrium.
b. How much output does each firm produce?
Correct Answer:
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a. The marginal revenue for Firm A:
MR =...View Answer
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Correct Answer:
Verified
MR =...
View Answer
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