Answer to Question #98001 in Microeconomics for Tuan Nguyen

Question

Two firms producing differentiated products compete by simultaneously choosing prices. Demand for firm A’s product is given by: qA= 30 - 5pA + 2pB. Firm B’s demand is qB= 30 - 5pB+ 2A. For each firm the marginal cost of producing a unit of the good is 6, C(qi) = 6qi.
Suppose instead that the firms were to collude with the objective of maximizing their combined profits. What price will each firm set? What profits will each firm earn

Answer 1

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