3. There are two gadget companies - X and Y. Each is trying to figure out...

 

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3. There are two gadget companies - X and Y. Each is trying to figure out the optimal quantity (Qx and Qy, respectively) to produce. The wholesale price (P) per gadget is given by P= 113 - Qx - Qy. Assume that each company has a cost (C) of 20 per gadget. Remember that Profit=(P-C)*Q. a. Write the best-response functions for X and Y. (In other words, find the optimal Qx as a function of Qy, and the optimal Qy as a function of Qx.) (10 pts.) b. What quantity does each wholesaler supply to the market in equilibrium? (10 pts.) 3. There are two gadget companies - X and Y. Each is trying to figure out the optimal quantity (Qx and Qy, respectively) to produce. The wholesale price (P) per gadget is given by P= 113 - Qx - Qy. Assume that each company has a cost (C) of 20 per gadget. Remember that Profit=(P-C)*Q. a. Write the best-response functions for X and Y. (In other words, find the optimal Qx as a function of Qy, and the optimal Qy as a function of Qx.) (10 pts.) b. What quantity does each wholesaler supply to the market in equilibrium? (10 pts.)

Answer rating: 100% (QA)

ANSWER a To find the bestresponse functions for companies X and Y we need to maximize their profits ... View the full answer