Consider the following demand and cost functions; P = 16000 - 4Q Q = Q. +...

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Consider the following demand and cost functions; P = 16000 - 4Q Q = Q. + Q: C(0) = 4000Q. C:(02) = 600002

(3) Bertrand Model. (a) (2 points) What is the output for each firm? (b) (3 points) What is the market equilibrium price and

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Answer 1

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Bertrand Model P = 16,000 - 4Q Quanto Firmi Ti = TRI- TC, = [16,000-4Q, +92770, - 40008, To = 16,0000, 40,² - 49,92 - 40000,

② 40, +8Q2 = 10,000 20, +uQ₂ =5,000 solving equation ① and 2P, + P2 = 3000 RQ, tu Q₂ =5,000 -3Q2 = -2000 02 = 2000 3 = 666.67

P = 8, 666.66 Masket Quantity = a +Q2 - 1166.66+ 666.67 = 1,833.32 (i = yooo (1166.66) = 4, 666, 640 C = 6000Q2 = 6000 (666.6

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Consider the following demand and cost functions; P = 16000 - 4Q Q = Q. +...

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