The demand for mysterious good X in Lansing is Q=12-P, where P is the price of...

The demand for mysterious good X in Lansing is Q=12-P, where P is the price of good X per pound and Q is the quantity demanded in pounds. The marginal cost of producing the good is $2 per pound. There is no fixed cost of producing the good. There are two firms, Alice and Bob, who can produce the good.

A) Find Alice's best response function.

B) Find Bob's best response function.

C) Find each firm's Nash equilibrium quantity.

D) What is the Nash equilibrium price?

E) What is the markup?

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

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