Question

In: Economics

You are the manager of Taurus Technologies, and your sole competitor is Spyder Technologies. The two...

You are the manager of Taurus Technologies, and your sole competitor is Spyder Technologies. The two firms’ products are viewed as identical by most consumers. The relevant cost functions are C(Qi) = 4Qi, and the inverse market demand curve for this unique product is given by P = 160 – 2Q. Currently, you and your rival simultaneously (but independently) make production decisions, and the price you fetch for the product depends on the total amount produced by each firm. However, by making an unrecoverable fixed investment of $200, Taurus Technologies can bring its product to market before Spyder finalizes production plans.

a. What are your profits if you do not make the investment?

b. What are your profits if you do make the investment?

Solutions

Expert Solution

a) Profits if you do not make the investmen

b) Profits if you do make the investmen


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Rahul Sunny answered 1 year ago
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