00:01
Over here, both firms have a constant marginal cost of c being equal to 10.
00:24
The market demand function is p is equal to 130 wherein we subtract q1 to which we add q2.
00:44
The value of p is said to be the market price and q1 and q2 are the outputs of firm 1 and firm 2 respectively.
00:52
So, to find the equilibrium, we maximize each firm's profit function.
00:57
Then, profit for firm 1 is i1 is equal to p wherein we subtract c which is 10 multiplied by q1.
01:14
Putting in the values, we get 130 wherein we subtract q1 to which we add q2 which is then subtracted by 10 multiplied by q1.
01:26
Equating it, we get 120 wherein we subtract q1 to which we subtract q2 which is then multiplied by q1.
01:35
We get it as 120 q1 to which we subtract q1 square to which we subtract q1 multiplied by q2.
01:46
Further, profit for firm 2 then will be i2 is equal to p wherein we subtract c which is then multiplied by q2.
02:07
So, putting in the values, 130 wherein we subtract q1 to which we add q2 which is then subtracted by 10 multiplied by q2...