Two firms compete by choosing price their demand functions


Two firms compete by choosing price. Their demand functions are Q1 = 40 – P1 + 0.5P2 and Q2 = 20 +0.5P1 - P2where P1 and P2 are the prices charged by each firm, respectively, and Q1 and Q2 are the resulting demands. a. Firm 1’s best response function (reaction function) is

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Business Economics: Two firms compete by choosing price their demand functions
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