What is firm bs best rest response function to firm a

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Reference no: EM13224082

Assume that two rms (A and B) produce identical products in a market. The (inverse) market demand curve is P = 240 -Q where Q is total output from both firms Q = qA + qB. Firm A has a total cost function TCA = 100qA and firm B has total cost function TCB = 80qB. Firm A has a first mover advantage and is able to choose its output before frm B.

a) What is firm B's best rest response function to firm A?

b) Given firm B's reaction function, what is firm A's total revenue from producing quantity qA?

c) Find the Stackelberg Equilibrium of each firm. Want an answer?

Reference no: EM13224082

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