Re: ME 2,,,ISI 2014..PLS HELPP

Posted by Ridhika on May 10, 2014; 5:47am
URL: http://discussion-forum.276.s1.nabble.com/ME-2-ISI-2014-PLS-HELPP-tp7589245p7589265.html

5a) Profit of firm 1 (call it P1) = q1(10-q1-q2)-q1
dp1/dq1 = 9 - 2q1-q2=0 -- Eq1
q1= (9-q2)/2 = Best response of firm 1 to q2 [BR1(q2)]
similarly BR2(q1)= q2 = (9-q1)/2 -- Eq2

Substitute eq 2 in eq 1 and u will get q1=3 and by symmetry q2=3

for part b i think they'll produce til their max op as 2<3 .. so for all level of output below 3 MR>MC.. so firms will find it profitable to produce