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Consider the following market game: there are two firms in an industry firm1 and firm 2. Firm 1 first chooses the quantity of its production and then firm 2 observing q1 will choose q2.

Here are the cost functions for these firms: C1(q1) = 10q1 + 100

C2(q2) = 5q2 + 150

Demand curve is given by P=1000-Q where Q is the total quantity produced in the market. What would be the output of each of these firms? Which firm will produce more? Why?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91566122

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