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  3. two firms a and b behave as bertrand competitors each...

Question: two firms a and b behave as bertrand competitors each...

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[3] Two firms, A and B, behave as Bertrand competitors. Each has a total cost function given as: Firm A Total Cost: TC 100 QA Firm B Total Cost: TC 100 QB Initially, these two firms produce a homogeneous product. What is the Nash equilibrium price each firm will charge? What is each firms profit at the Nash equilibrium? B. firm A decides produce a product that is differentiated from As product. In so doing, each firm faces the following demand: Firm A Demand: QA 500 PA PR Firm B Demand: QB 500 PB PA The price-reaction functions then become: Firm A: P 300 +0.5PB Firm B: P 3000 0.5 PA What is the intuition behind the positive slope of each price reaction function? What is the Nash equilibrium price each firm will charge? What is each firms profit at the Nash equilibrium?
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