Question

If the market demand curve of two firms 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 firms are operating at a constant average and marginal cost of AC = MC = 4.Find out reaction functions of the two firms as per Counot’s model. Calculate the profit maximizing equilibrium price and output.

Answer 1

Explanation:

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