Consider two oligopolistic firms (Firm 1 and Firm 2) in a price-setting duopoly. Both firms have no marginal costs (MC = 0) but do have fixed costs F, = 10, i = 1, 2. The demand functions for Firm 1 and Firm 2 are given by q, = 13 - 2p, + p, and q, = 13 - 2p, +P,, respectively. A. Calculate the values of profit-maximizing quantities and prices for Firm 1 and Firm 2, and their respective profits. B. If the two firms are working together and collude on price (p, = p, = p), find the new %3D collusion price.

Consider two oligopolistic firms (Firm 1 and Firm 2) in a price-setting duopoly. Both firms have no marginal costs (MC = 0) but do have fixed costs F, = 10, i = 1, 2. The demand functions for Firm 1 and Firm 2 are given by q, = 13 - 2p, + p, and q, = 13 - 2p, +P,, respectively. A. Calculate the values of profit-maximizing quantities and prices for Firm 1 and Firm 2, and their respective profits. B. If the two firms are working together and collude on price (p, = p, = p), find the new %3D collusion price.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter10: Monopolistic Competition And Oligopoly

Section: Chapter Questions

Problem 3SCQ: Consider the curve in the figure below, which shows the market demand. marginal cost, and marginal...

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