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Managers at Firm A and Firm B must make pricing decisions simultaneously. The following demand and...

Managers at Firm A and Firm B must make pricing decisions simultaneously. The following demand and long-run cost conditions are common knowledge to the managers:

Qa = 72 – 4Pa + 4 Pb

LACa = LMCa = 2

Qb = 100 – 3Pb + 4 Pa

LACb = LMC b = 6.67

2.1. Derive the best response curve for firm A

2.2. Derive the best response curve for firm B.

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