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## : Firm 1 and firm 2 produce a same product which they sell t

Paper help Economics : Firm 1 and firm 2 produce a same product which they sell t

# : Firm 1 and firm 2 produce a same product which they sell t

: Firm 1 and firm 2 produce a same product which they sell to a market with inverse demand f… Show more Question: Firm 1 and firm 2 produce a same product which they sell to a market with inverse demand funtion P(Q)=120-Q. Firm 1 has a constant marginal cost of C1=\$15 and firm 2 has a constant marginal cost of C2=\$30. (a) Suppose that firms choose prices to compete. Suppose further that prices must be in dollars and cents, so that for example \$12.31 or \$12.00 is a permissible price, but \$12.315 is not. Find Bertrand equilibrium prices for the firms. How much profit does each make in Bertrand equilibrium. (b) Now suppose that firm 1’s marginal cost changes to C1=30, firm 2’s marginal cost changes to C2=76, but market demand remains as before. Suppose further that the two firms interact in the market indefinitely. Will each firm have any incentive to form a cartel with the other? Support your answer. Please help me with this homework problem! I’m having trouble finding answers. Please be specific about the process to get to the solution. Thank you! • Show less

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