Two firms are producing identical goods in a market characterized by the inverse demand curve P = 120 - 4Q, where Q is the sum of Firm 1's and Firm 2's output, q₁ + q₂. Each firm's marginal cost is constant at $20. Graph the reaction function for each firm and indicate the Nash equilibrium.

Question

Quizplus · Accepted Answer

The Answer of Two firms are producing identical goods in a market characterized by the inverse demand curve P = 120 - 4Q, where Q is the sum of Firm 1's and Firm 2's output, q₁ + q₂. Each firm's marginal cost is constant at $20. Graph the reaction function for each firm and indicate the Nash equilibrium.

Two Firms Are Producing Identical Goods in a Market Characterized