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Unformatted text preview: T /2 everywhere you see Q 1 or Q 2 in the Total Cost functions. 4) Take the derivative of profit with respect to Q T and set that equal to zero. Solving for Q T yields the quantity that maximizes industry profit. 5) Plug Q T into the market demand equation to find the industry price. 6) Q T /2 gives you Q 1 & Q 2 . Thats it. Six steps and youre done. Note: Step 3 only works where the firms costs are symmetric. Solving with asymmetric costs is takes a little extra work and we havent shown you how, so it wont come up on the final....
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- Spring '07