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Two ?rms produce homogeneous outputs with cost functions C1=q1^2 C2=2q2^2and the inverse market demand functionp=100-(q1+q2) Derive the pro?t frontier, and explain why total pro?ts fall as the ?rms...

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Two ?rms produce homogeneous outputs with cost functions
C1=q1^2
C2=2q2^2and the inverse market demand functionp=100-(q1+q2)
Derive the pro?t frontier, and explain why total pro?ts fall as the ?rms redistribute pro?t between themselves by redistributing output.
Answered Same Day Dec 23, 2021

Solution

David answered on Dec 23 2021
122 Votes
Two ?rms produce homogeneous outputs with cost functions
C1=q1^2
C2=2q2^2
and the inverse market demand function
p=100-(q1+q2)
Derive the pro?t frontier
, and explain why total pro?ts fall as the ?rms redistribute pro?t between themselves by red
istributing output.

Answer:
Demand curve: p=100-(q1+q2)

Denote total output by q = (q1+q2)

Profit frontier of firm1 is...
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