Question: Hi. I really need help solving these problems. Can you solve showing all the steps, please? Solve for the quantity produced by each firm and
Hi. I really need help solving these problems. Can you solve showing all the steps, please?




Solve for the quantity produced by each firm and the equilibrium price. To verify that you have found the correct equilibrium, compute qi, q;, and p* if a = 4, b = 0.01, c1 = 2, and c2 = 1. 91 = 92 = =Problem PS7.2.4 1 point possible (graded) Now, let's go back to the case where all firms have the same cost function. In class we saw the Cournot competition model for two firms. Now, we are going to get you through the Cournot model with three firms. Assume that demand for a good is given by p = a - bQ, and that there are 3 firms competing in quantity with a constant marginal cost c c1 > C2. Find the reaction functions of firms 1 and 2 in this market: how the optimal quantity produced depends on the quantity produced by the other firm. To verify that you have found the correct reaction functions, compute the optimal q1 if q2 = 100, a = 4, b = 0.01, c1 = 2, and c2 = 1. (Note that this is not necessarily an equilibrium.) 91 =
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