1-Consider two firms facing the Onsidering the following quetion can you please help me in solving...

1-Consider two firms facing the Onsidering the following quetion can you please help me in solving the following Q- demand curve P = 20 – 5Q. The firms’ cost functions are MC1=MC2=10

. b. Determine the total profit-maximizing quantity, if the two firms collude.

c. Graphically show the Cournot equilibrium point and collusion curve.

d. Use the Stackelberg model to determine the equilibrium point if Firm 1 sets its output first and then firm 2.

e. Use the Bertrand model and explain what price will each firm choose, and how much profit will each earn?

Expert Solution

2

in bertrand model of oligopoly firm independently choose prices in order to maximise profits.

bertrand duopoly model

in this case firms collude and choose output at 2 and prices at 10

Rahul Sunny answered 2 years ago

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