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1. Consider a differentiated product market where the anticipated demand functions and the cost functions of two dominant firms are given below:
X1 = 94 - P1 + 2P2, X2 = 66 + P1- 2 P2, and C (X1) = 2X1, C(X2) = 3X2
(a) Obtain the price reaction functions.
(b) Obtain the market share functions.
(c) How much do the firms produce in group equilibrium?
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