Two firms are producing identical goods in a market characterized by the inverse demand curve P = 120 – 4Q, where Q is the sum of Firm 1's and Firm 2's output, q₁ + q₂. Each firm's marginal cost is constant at $20.

Graph the reaction function for each firm and indicate the Nash equilibrium.

Answer rating: 100% (QA)

Heres how to analyze it Inverse Demand Curve We are given P 120 4Q where P is the market price and Q is the total output q1 q2 This is an inverse dema... View the full answer