Two firms face a demand equation
given by: P=200,000 –6(q1+q2) where q1 and q2
are the outputs of...

Question

Two firms face a demand equation
given by: P=200,000 –6(q1+q2) where q1 and q2
are the outputs of the two firms.The
total cost equations for the two firms are given by:TC1=8000q1 and TC2=8000q2
If each of the firms sets its own output rate to
maximize its profits, assuming that the other firm holds its rate of output
constant, solve for the optimal output of each firm (q1* and q2*),
the optimal price (P*), and the profit of each firm.

David · Accepted Answer

Two firms face a demand equation given by: P=200,000 –6(q1+q2) where q1 and q2 are the outputs of the two firms
Two firms face a demand equation given by: P=200,000 –6(q1+q2) where q1 and q2 are the outputs of the two firms. The total cost equations for the two firms are given by:

Two firms face a demand equation given by: P=200,000 –6(q 1 +q 2 ) where q 1 and q 2 are the outputs of the two firms.The total cost equations for the two firms are given by:TC 1 =8000q 1 and TC 2...

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