The inverse demand that duopoly quantity-setting firms faces is p = 90 - 2q1 - 2q2. Firm #1 has no marginal cost of production, while firm #2 has a marginal cost of $30. How much does each firm produce if they move simultaneously? What is the equilibrium price?
Added by Guillermo D.
Step 1
Firm #1: π1 = (p - 0)q1 = (90 - 2q1 - 2q2)q1 = 90q1 - 2q1^2 - 2q1q2 Firm #2: π2 = (p - 30)q2 = (90 - 2q1 - 2q2 - 30)q2 = 60q2 - 2q1q2 - 2q2^2 Show more…
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