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Question - Two companies that compete and have the same market power in the sewing machine industry are trying to compete for market share by increasing the number of customers using sewing machines that can be served. The two companies are Jarum (J) and Benang (B). Each firm's marginal cost is the same (MC equal to 50), and the market demand from this industry is D(P)=Q= 6000 - ¼P. The products offered are homogeneous, so customers cannot see the differences in each company's products.
Required -
a. Find the Jarum (J) company's reaction function to Benang (B) and vice versa?
b. Calculate the equilibrium level of Cournot competition in the market!
c. Calculate the profit of each company!
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