Consider a market with inverse demand PD (Q) = 50 - - -Q, where Q denotes...

 

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Consider a market with inverse demand PD (Q) = 50 - - -Q, where Q denotes the quantity 2 and P the price. The market is served by two firms, so that Q = 9₁ +92. Both firms produce the good at constant marginal and average total costs of C₁ = C₂ = 5. None of the answers is correct. Firms have to pay a fixed cost to produce. If the two firms form a collusive monopoly, the industry profit is 200. If the two firms compete in quantities, the market price in the Nash equilibrium is 35. If the two firms compete in quantities, the best response function of firm 1 is q₁ (92) = 50 - 92. Consider a market with inverse demand PD (Q) = 50 - - -Q, where Q denotes the quantity 2 and P the price. The market is served by two firms, so that Q = 9₁ +92. Both firms produce the good at constant marginal and average total costs of C₁ = C₂ = 5. None of the answers is correct. Firms have to pay a fixed cost to produce. If the two firms form a collusive monopoly, the industry profit is 200. If the two firms compete in quantities, the market price in the Nash equilibrium is 35. If the two firms compete in quantities, the best response function of firm 1 is q₁ (92) = 50 - 92.

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The detailed answer for the above question is provided below Given inverse demand PDQ 50 52Q and Q q... View the full answer