Question

If the market demand curve of the two firm in a duopolistic market is P=20-Q where Q=Q1+Q2 and Q1 and Q2 are the outputs of firm 1 and firm 2 respectively. The firm are operating at a constant average and marginal cost of AC=MC=4. Find out reaction functions of the two firm as per counot's model.calculate the profit maximizing equilibrium price and output

Answer 1

Answer:

What happens to the equilibrium price and quantity in such a market if one firm introduces a new, improved product? ... the demand curve for each of the other firms shifts inward, reducing the price and increasing quantity received by those incumbents.