Consider a local market where there are two local firms, A and B with the following cost functions producing homogenous good: CA=q₁² +50q4-98² CB=2q8² +70qB+0.25q² where q and qв represent the production levels of firm A and firm B, respectively. The market price of the good produced by two firms is equal to 150. Furthermore, suppose that the two firms act as price-takers (because firms from other locations also serve it). a) Briefly describe the relationship between the two firms (Hint: study the cost structure). b) Find the production levels and the profits of the two firms, assuming that they operate independently.

Consider a local market where there are two local firms, A and B with the following cost functions producing homogenous good: CA=q₁² +50q4-98² CB=2q8² +70qB+0.25q² where q and qв represent the production levels of firm A and firm B, respectively. The market price of the good produced by two firms is equal to 150. Furthermore, suppose that the two firms act as price-takers (because firms from other locations also serve it). a) Briefly describe the relationship between the two firms (Hint: study the cost structure). b) Find the production levels and the profits of the two firms, assuming that they operate independently.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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