(2) The market demand is given by P = 120 — 2Q. There are only two ﬁrms producing this good. Hence the quantity supplied in
(2) The market demand is given by P = 120 — 2Q. There are only two ﬁrms producing this good.
Hence the quantity supplied in the market is the sum of each ﬁrm’s quantity supplied (that is,
Q = (1,4 + qB), Where qj is the ﬁrm j’s quantity supplied). Firm A has zero marginal cost, while
Firm B has the marginal cost of $20. Each ﬁrm has no ﬁxed cost, and simultaneously chooses how
many units to produce. (a) is Firm A’s proﬁt function if Firm A takes the quantity chosen by Firm B, qB, as given?
(b) Find the equilibrium quantities produced by each Firm (@143).
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