Two firms, Aero and Pareto, produce parachutes. Aero faces the demand curve q_A = 4,000 - 2P_A + P_P, and Pareto faces the demand curve q_B = 4,000 - 2P_P + P_A. Aero's output, q_A, is sold at a price of P_A.Pareto's output, q_P, is sold at a price of P_p. The firms' parachutes are differentiated. For simplicity, assume marginal costs are zero.

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The Answer of Two firms, Aero and Pareto, produce parachutes. Aero faces the demand curve q_A = 4,000 - 2P_A + P_P, and Pareto faces the demand curve q_B = 4,000 - 2P_P + P_A. Aero's output, q_A, is sold at a price of P_A.Pareto's output, q_P, is sold at a price of P_p. The firms' parachutes are differentiated. For simplicity, assume marginal costs are zero.

Two Firms, Aero and Pareto, Produce Parachutes