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In: Economics

Suppose there are two firms making the same product. The demand curve for the product is...

Suppose there are two firms making the same product. The demand curve for the product is Q = 500 - 5P. Suppose both firms have to select how many items they make at the same time. Once they produce they make the items, they take them to market and sell them for the market clearing price. Assume both firms have the same cost function C = 100 + 10q. What is the optimal output for each firm? What is each firm's profit and market clearing price?

Suppose Firm 1 gets to go to market 1^st in the above example. What are the new solutions for optimal quantity, market price, and profit?

Suppose, Firm 2 has a cost curve that is 200 + 10q. Does your answer for #1 change? Why or why not? If it does, resolve #1.

Suppose Firm 2 has a cost curve that is 200 + 20 q. Does your answer for #1 change? Why or why not? If it does, resolve #1.

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Expert Solution

This is my answer

Thank you...

Rahul Sunny answered 2 years ago
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