Consider bertrand competition with homogeneous products two, Ask an Expert

Economics

Consider Bertrand competition with homogeneous products. Two firms, 1 and 2, produce an identical product and compete by choosing price. Consumers buy from the firm with the lower price. If the prices are identical, however, assume all consumers buy from firm 1. Inverse demand for the product is given by Q = 80 − P and each firm has a marginal cost of 10. Assume that the firms can only set integer prices, so if one wants to undercut the other by the smallest amount possible, the undercut must be at least a dollar.

(a) Write out the best response function of firm 1 for any price that firm 2 could choose.

(b) Write out the best response function of firm 2 for any price that firm 1 could choose.

View complete question

Business Economics, Economics

Category:- Business Economics
Reference No.:- M91572512

Have any Question?Write your Review or question?

Related Questions in Business Economics

Advertisements suggest that a new window design can save

Advertisements suggest that a new window design can save $400 per year in energy cost over its 30-year life. At an initial cost of $8,000 and zero salvage value, using IRR, is this window a good investment? MARR is 8%.

Suppose the timing device used in thenbspmensnbsprace

Suppose the timing device used in the men's race failed to activate at the start of the race and instead began to record the times seconds into the race. Consider how the competitors' times would be affected. Would th ...

A local article reported that at least 50 of the

A local article reported that at least 50% of the construction jobs in the metropolitan Dallas area are being filled by undocumented foreign workers. Kim Brown believes the actual percentage is much lower than that, and ...

Consumer product manufacturers commonly include customer

Consumer product manufacturers commonly include customer satisfaction surveys on product warranty cards that are sent back to the company. An outdoors company redesigned a popular camping tent, and it wants to know wheth ...

Please help me answer the followingkingsnorth et al 2002

Please help me answer the following Kingsnorth et al. (2002) examined the case processing time (in days) from arraignment to disposition for cases processed by the Sacramento County District Attorney's office. For the 90 ...

Imagine youve started a new pizza restaurantnbspit costs

Imagine you've started a new pizza restaurant. It costs you about $6 to produce a pizza. Last week you sold 500 pizzas for $12 each. This week you raised your price and sold 375 pizzas for $14 each. What price should yo ...

Taylor found that 8 of the recipients of loans form a

Taylor found that 8% of the recipients of loans form a particular mortgage lender default within 3 years. If he takes a random sample of 736 customers who received loans 3 years ago, what is the average number of custome ...

Tests can determine with some degree of accuracy whether a

Tests can determine, with some degree of accuracy, whether a subject indeed has the disease for which s/he is being tested. For instance, a new screening procedure for heart disease was tested on 100 patients with heart ...

What is asymmetric information and how does it affect the

What is asymmetric information and how does it affect the consumer or buyer?

Researchers at a university decided to test the hypothesis

Researchers at a University decided to test the hypothesis that restaurant servers who squat to the level of their customers would receive a larger tip. In the experiment, the waiter would flip a coin to determine whethe ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Business Economics Expert