Question

1) The Demand for this product is Q = 500 - 0.5P - Firm 1's cost...

1) The Demand for this product is Q = 500 - 0.5P

- Firm 1's cost function is C1 = 10Q1

- Firm 2's cost function is C2 = 10Q2

These firms are in BERTRAND competition. What is the price Firm 1 charges in equilibrium?

2) The Demand for this product is Q = 500 - 0.5P

- Firm 1's cost function is C1 = 10Q1

- Firm 2's cost function is C2 = 13Q2

These firms are in BERTRAND competition. What is the price Firm 1 charges in equilibrium?

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Answer #1

Hence, price charged by firm 1 is $10. Firm cannot charge less than or more than this as he will suffer a loss.

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