Question

In: Economics

Suppose that firms A,B,C and D are Bertrand duopolists in the salt industry. The market demand...

Suppose that firms A,B,C and D are Bertrand duopolists in the salt industry. The market demand curve can be specified as Q=100-3p, Q=qA+qB+qC+qD. The cost of firm A is C(qA)=7qA The cost of firm B is C(qB)=3qB The cost of firm C is C(qC)=7qC The cost of firm D is C(qD)=5qD

Firm A will earn?

Firm B will earn?

Firm C will earn?

Firm D will earn?

Solutions

Expert Solution

Explanation: -

As Firms A, B, C, and D are Bertrand duopolists and in Bertrand rivalry, firms produce where P = MC as all the three firms A, C and D have superfluous expense = $7 while Firm B's MC = $3

So just Firm B will pass in general whole while the various firms don't make anything.

By the Firm B will pick a value which is simply not really the Marginal expense of the various firms. Recognize it pick a cost of $6.(it could pick $6.9 in any case here I am taking $6 to make it entire number)

Rahul Sunny answered 6 months ago
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