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p(Q)= 1… Show more Firm 1 and firm 2 produce a same produc

Paper help Economics p(Q)= 1… Show more Firm 1 and firm 2 produce a same produc

Economics

p(Q)= 1… Show more Firm 1 and firm 2 produce a same produc

p(Q)= 1… Show more Firm 1 and firm 2 produce a same product which they sell to a market inverse demand function p(Q)= 120- Q. Firm 1 has a contant marginal cost of c1=15 and firm 2 has a constant marginal cost of c2=30 a) suppose the 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 indefinetly. Will each firm have any incentive to form a cartel with the other? Support your answer. • Show less

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