Question

3. (20 points) Citroen and Renault both produce sedan cars for the Turkish market. The demand curves for Citroen and Renault are given, respectively, by \[ \begin{array}{l} Q_{C}=50,000-2 P_{C}+P_{R} \\ Q_{R}=100,000-2 P_{R}+P_{C} \end{array} \] \( Q_{C} \) and \( Q_{R} \) stand for the number of cars produced per year for the Turkish market for Citroen and Renault, respectively. The marginal cost of each carrier is 10,000 TL per car. a) If Citroen sets a price of \( 20,000 \mathrm{TL} \), what is the equation of Renault's demand curve and marginal revenue curve? What is Renault's profit-maximizing price when Citroen sets a price of \( 20,000 \mathrm{TL} \) ? b) Redo part (a) under the assumption that Citroen sets a price of 40,000 TL. c) Derive the equations for Citroen's and Renault's price reaction curves. d) What is the Bertrand equilibrium in this market?

          3. (20 points) Citroen and Renault both produce sedan cars for the Turkish market. The demand curves for Citroen and Renault are given, respectively, by
\[
\begin{array}{l}
Q_{C}=50,000-2 P_{C}+P_{R} \\
Q_{R}=100,000-2 P_{R}+P_{C}
\end{array}
\]
\( Q_{C} \) and \( Q_{R} \) stand for the number of cars produced per year for the Turkish market for Citroen and Renault, respectively. The marginal cost of each carrier is 10,000 TL per car.
a) If Citroen sets a price of \( 20,000 \mathrm{TL} \), what is the equation of Renault's demand curve and marginal revenue curve? What is Renault's profit-maximizing price when Citroen sets a price of \( 20,000 \mathrm{TL} \) ?
b) Redo part (a) under the assumption that Citroen sets a price of 40,000 TL.
c) Derive the equations for Citroen's and Renault's price reaction curves.
d) What is the Bertrand equilibrium in this market?

3. (20 points) Citroen and Renault both produce sedan cars for the Turkish market. The demand curves for Citroen and Renault are given, respectively, by

QC=50,000-2 PC+PR

QR=100,000-2 PR+PC

QC and QR stand for the number of cars produced per year for the Turkish market for Citroen and Renault, respectively. The marginal cost of each carrier is 10,000 TL per car.
a) If Citroen sets a price of 20,000 TL, what is the equation of Renault's demand curve and marginal revenue curve? What is Renault's profit-maximizing price when Citroen sets a price of 20,000 TL ?
b) Redo part (a) under the assumption that Citroen sets a price of 40,000 TL.
c) Derive the equations for Citroen's and Renault's price reaction curves.
d) What is the Bertrand equilibrium in this market?

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