Q = 75 – P + 0.5P Q = 75 – P + 0.5P A. is the relationship between Firm A’s optimal price and Firm B’s optimal price? nt: Start

Q = 75 – P + 0.5P Q = 75 – P + 0.5P A.   is the relationship between Firm A’s optimal price and Firm B’s optimal price? nt: Start with the inverse demand function for Firm A and then set MR =MC. B.   If Firm B lowers its price, how, in terms of price, should Firm A respond? C.  Use Firm A’s price reaction function from part a) to find the equilibrium values for the following: i) The firms’ equilibrium prices, P and P ii) The firms’ equilibrium quantities, Q and Q iii) The profit each firm earns at equilibrium

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