Question

a duopoly market in which the demand is = p = 120 - 2Q. The total cost for firm 1 is TC1=20q1, the total cost for firm 2 is TC1=40q2. The good is homogeneous. The two firms collude. What is the equilibrium price?

Answer 1

A duo poly market in which the demand ist _P=120-20 where Q = 91 +2 = 120- 2191192) Total revenue (TR) = P(qi+q2) =1120-2 (2,7%) (aita) Now, - and total cost for from 1, Tel=2021 total cost for firm 2, TC2 = 4092 Now, Joint Pron't will be | - 0 - TR - Tc 1120-2 (91+22){(21+22) - 202,-40%. Now, the Joint Prolit manimising condition will be ƏT co and 21 aa π = 120 (91492) - 2(21+q) (q +22) - 202,-40% = 12091412022-22-22122-22122222- 20% -4022 2q2 se Now Scanned with CamScanner MORE

- -227-29 - 4 q qz +100g, +80.22 Now; _2732421 – 4227100=0:1 22 - (1) -4844422 - 1oo And 271 . -422-42,790 0 222 - E S ) Way +472 = 80...12 L solving equation (1) and (2) Weget. 4217 492 = 100 491+ 492 = 80. and or, q, 20 and 92=0 and hence the equilibrium price will be tol Con jenip=120:-2 C21727) MON - ST . 120:- 2(0) Scanned with $120 CamScanner