Suppose the price reaction function for Mars' chocolate bars is Pm = (Vm+cm)/2)+0.5Ph, where Pm is the average price of Mars bars and Ph is the average price of Hershey brand chocolate bars. Likewise, the price reaction function for Hershey bars is Ph = (Vh+ch)/2 +0.5Pm. %3D Vm=Vh = 1.5 and the marginal cost for producing chocolate bars for both firms is $.50. What will each bar sell for?

Suppose the price reaction function for Mars' chocolate bars is Pm = (Vm+cm)/2)+0.5Ph, where Pm is the average price of Mars bars and Ph is the average price of Hershey brand chocolate bars. Likewise, the price reaction function for Hershey bars is Ph = (Vh+ch)/2 +0.5Pm. %3D Vm=Vh = 1.5 and the marginal cost for producing chocolate bars for both firms is $.50. What will each bar sell for?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter11: Profit Maximization

Section: Chapter Questions

Problem 11.5P

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