Solve for the reaction functions of firms one and two


Firms 1 and 2 produce and sell goods that are perfect substitutes (for instance, both firms produce and sell microprocessors) and face the (market) demand curve D (p) =1000 - 2p; where p is the price. We assume that the firms choose output quantities simultaneously and non-cooperatively (i.e. quantity is the choice variable). Assume that the total cost function of firm 1 is T C (q1) = 0 and the total cost function of firm 2 is T C (q2) = 0. Solve for the Reaction Functions of firms 1 and 2.

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Microeconomics: Solve for the reaction functions of firms one and two
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