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Suppose two firms are competing in prices (Bertrand) in an industry where demand is p=200-4Q. (a) If both firms have MC=120, what is the equilibrium

Suppose two firms are competing in prices (Bertrand) in an industry where demand is p=200-4Q.

(a) If both firms have MC=120, what is the equilibrium quantity for each firm? Profits?

(b) Suppose one firm has MC=120 and one has MC=100. Approximately how much profit does each firm

make? (c) Suppose one firm has MC=150 and one has MC=0. Approximately how much profit does each firm

make?

Top Answer

a. In Bertrand competition, equilibrium will be perfect competition price and quantity. P=MC 120=200-4Q Q=20... View the full answer

1 comment
  • Thank you. Some clarification on methodology would have been helpful.
    • zanderfuternick
    • May 01, 2016 at 6:32pm

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