Assume simultaneous price competition to marginal cost

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Reference no: EM131244400

The soda industry is composed of two firms. Suppose that the demand curve and marginal revenue curve for soda are:

P = 100 - Q

MR = 100 - 2Q

where P is the price of a can and Q is the quantity demanded (cases) of soda. Suppose the total cost function and marginal cost function of each firrm are:

TC = 2 + 15q

MC = 15

where TC is total cost (in tens of thousands of dollars) per month and q is the quantity produced (in millions) per month by the firm.

a. Assume simultaneous price competition to marginal cost. How many cases are supplied? What are each firrm's profits?

b. Assume the two rms collude and behave as a monopolist. How many cases are supplied and at what price? What are each firm's profits?

Reference no: EM131244400

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