The market for decorative lampshades

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Suppose that there are only two firms (Firm A and Firm B) in the market for decorative lampshades. Letthe inverse demand function and the total cost function be given by  P = 50 –Q   and TC = 2Q.

The firms compete with each other by choosing the quantity of lampshades the wish to produce. In thisscenario Firm A is able to choose its production level first

(a) How many lampshades will Firm A choose to produce?

(b) How many lampshades will Firm B choose to produce?

(c) Solve for the market price for the lampshades.

(d) Solve for the profit earned by each firm. What’s the industry profit?

Reference no: EM131378570

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