Suppose there are two firms operating in the same market and compete over prices. the firmssell a differentiated product and their demand is given byFirm 1's demand: -1.5 p,+p,+273Firm 2's demand: 0.5 p,-1.5 p2+293The firms' reaction function will be of the form p,=A¬+a¡ P2 and p2=A2+a2P1where A1=and a1=|A2=and a2=Are pricesOstrategic complementsOstrategic substitutesWhat are the equilibrium prices in this marketP1=and p2=What are the quantities demanded from each firmq1=and q2=What are the profits for each firmT1=and 12=|

q1=-1.5p1+p2+273q2=0.5p1-1.5p2+293TR1=p1q1 =p1(-1.5p1+p2+273)…

Suppose there are two firms operating in the same market and compete over prices. the firms sell a differentiated product and their demand is given by Firm 1's demand: -1.5 p,+p2+273 Firm 2's demand: 0.5 p,-1.5 p2+293 The firms' reaction function will be of the form p1=A1+a, p2 and p2=A2+a2P1 where A1= and a1= A2= and a2= Are prices Ostrategic complements Ostrategic substitutes What are the equilibrium prices in this market P1= and p2= What are the quantities demanded from each firm and q2= What are the profits for each firm TT= and t2=

Suppose there are two firms operating in the same market and compete over prices. the firms sell a differentiated product and their demand is given by Firm 1's demand: -1.5 p,+p2+273 Firm 2's demand: 0.5 p,-1.5 p2+293 The firms' reaction function will be of the form p1=A1+a, p2 and p2=A2+a2P1 where A1= and a1= A2= and a2= Are prices Ostrategic complements Ostrategic substitutes What are the equilibrium prices in this market P1= and p2= What are the quantities demanded from each firm and q2= What are the profits for each firm TT= and t2=

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.4P

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Please
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