Question

2011 complete HW Score: 15 Suppose that two identical firms produce widgets and that they are the only forms in the market. Their costs are given by C, 600, and C determined by the following demand curve 600, who is the p p2100- where Q = 0, +Q2 Find the Coumot-Nash equilibrium. Calculate the profit of each firm at this equilibrium (For all of the following enter a numere response rounded to be decompos) When competing each firm will produce units of output remiundo, tempul

Answer 1

firm 1. Cost = C, = 60Q Firm 2 Cost = C₂ = 6002 Price - Here - in the market, P=2100-Q Q=Q, taz- P = 2100-0, - Q Nowy Total revenue of firm 1 = TR = Pag. =) TR = 2100d, -Q, ² - Q , Profit a firm I = TR, -C, - a = 21000, -Q, 2 - Q Q - 600, for maximizing ñ we will differentiate ta with respect to a, and then equate it to zero. 2100-20-Q, -60 =0 Endy + 1020 - 0.

Following similar steps for firm 2, We get TR₂ = P2 = 21000 - 2 0 - 2 2 2 Pigits Az = 21000, -2102-03-6002 differentiating for maximization => 2100-01-204-60=0 - Q2 = +1020 - ©

solving & & (2 we get, Q = Q = 340 units. Poslite, n a = 2100x340-340² - 340² - 600340 Profits = $ 462.400 each. In equilibrium, each firm will produce 340 units and earn a profit of $462,400.