Hale's One Stop Gas and Auto Service competes with Murray's Gas and Service Mart. The local demand is given by: P = 2.50 - 0.01Q. Hale's marginal cost function is:
(q_H) = 0.35 q_H. Murray's marginal cost function is:
(q_M) = 0.30 q_M. Given the demand relationship above, Hale's marginal revenue function is:
( q_H, q_M) = 2.50 - 0.02 q_H - 0.01 q_M. Determine Hale's reaction function. Murray's marginal revenue function is:
(q_M, q_H) = 2.50 - 0.02 q_M - 0.01 q_H. Determine Murray's reaction function. What is the Cournot solution?

Question

Hale's One Stop Gas and Auto Service competes with Murray's Gas and Service Mart. The local demand is given by: P = 2.50 - 0.01Q. Hale's marginal cost function is:

(q_H) = 0.35 q_H. Murray's marginal cost function is:

(q_M) = 0.30 q_M. Given the demand relationship above, Hale's marginal revenue function is:

( q_H, q_M) = 2.50 - 0.02 q_H - 0.01 q_M. Determine Hale's reaction function. Murray's marginal revenue function is:

(q_M, q_H) = 2.50 - 0.02 q_M - 0.01 q_H. Determine Murray's reaction function. What is the Cournot solution?

Quizplus · Accepted Answer

The Answer of Hale's One Stop Gas and Auto Service competes with Murray's Gas and Service Mart. The local demand is given by: P = 2.50 - 0.01Q. Hale's marginal cost function is: (q_H) = 0.35 q_H. Murray's marginal cost function is: (q_M) = 0.30 q_M. Given the demand relationship above, Hale's marginal revenue function is: ( q_H, q_M) = 2.50 - 0.02 q_H - 0.01 q_M. Determine Hale's reaction function. Murray's marginal revenue function is: (q_M, q_H) = 2.50 - 0.02 q_M - 0.01 q_H. Determine Murray's reaction function. What is the Cournot solution?

Hale's One Stop Gas and Auto Service Competes with Murray's