Determine the best response functions of the firm, Business Economics

1. Consider the market where there is product differentiation with two firms. The firms are choosing prices p1 and p2 and have demands given by

q1 = 40 - 0.5 p1 + p2

q2 = 60 - 2 p2 + p1

a) Assuming zero marginal and zero fixed costs, what are the firms' best response functions, that is best price of firm 1 given price of firm 2, and best price of firm 2 given price of firm one.

Posted Date: 3/28/2013 3:47:40 AM | Location : United States

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