Confirm firm 1s optimal price depends on p2

Reference no: EM13245147

1. Two firms:
Q1=75-P1+.5P2 P1=75+.5P2-Q1 >>>> 75+.5P2-2Q1=30
Q2=75-P2+.5P1

AC=MC=30

a) Confirm firm 1's optimal price depends on P2 according to P1=52.5+.25P2 (Set up profit expression of profit firm 1=(p1-30)Q1
=(P1-30)(75-P1+.5P2) and set Marginal Profit = 0 to solve for P1 in terms of P2. Alternatively, set MR1=MC and solve for Q1 and then
P1 in terms of P2

2. Instead, the firms compete by setting quantities rather than prices. Rewriting the demand equations P1=[150-(2/3)Q2]-(4/3)Q1
and P2=[150-(2/3)Q1]-(4/3)Q2. Increases in the competitor's output lowers the intercept of the firm's demand curve

a) MR1=MC to confirm that firm 1's optimal quantity depends on Q2 according to Q1=45-.25Q2

b) Equilibrium Q1=Q2

Reference no: EM13245147

Questions Cloud

Calculate the maximum amount of energy : Given a capacitor whose plates measure 15cm by 3.7 cm and are separated by a 2.2mm air gap. Calculate he maximum amount of energy which can be stored in the capacitor under these conditions

Which should be built at an interest rate of per year : Two large-scale conduits are under consideration by a large municipal utility district (MUD). The first involves construction of a steel pipeline at a cost of $225 million. Portions of the pipeline will have to be replaced every 40 years at a cost..

Explain solution of iron chloride is combined : What is the experimental yield (in g of precipitate) when 15.4 mL of a 0.6 M solution of iron(III) chloride is combined with 19.8 mL of a 0.719 M solution of lead(II) nitrate at a 80.1% yield

Foreign policy change for united states during cold war : How did foreign policy change for the United States during the Cold War?

Confirm firm 1s optimal price depends on p2 : Confirm firm 1's optimal price depends on P2 according to P1=52.5+.25P2 (Set up profit expression of profit firm 1=(p1-30)Q1 =(P1-30)(75-P1+.5P2) and set Marginal Profit = 0 to solve for P1 in terms of P2.

Explain what is the equilibrium concentration of cu+ (aq) : What is the equilibrium concentration of Cu+ (aq) in a solution that is 0.0200M solution in CuNO3 and 0.450M HCl (aq)

Calculate the magnitude of the necessary lifting force : A jet flying at 132 m/s banks to make a horizontal circular turn. The radius of the turn is 3810 m, and the mass of the jet is 1.88 105 kg

Explain what is the limiting reactant when equal masses : What is the limiting reactant when equal masses of iron(III) chloride and potassium phosphate react in solution?

By how much would the econmys mony supply increase : assume that all other banks hold only the required amount of reserves.if ABC DECIDES TO REDUCE ITS RESERVES TO ONLY THE REQUIRED AMOUNT ,BY HOW MUCH WOULD THE ECONMY'S MONY SUPPLY INCREASE

User Account

All Pages