Two Firms Share a Market with Demand Curve Q=90-0

question 20

Multiple Choice

Two firms share a market with demand curve Q=90-0.5P. Each has cost function C(q) =900+q². Suppose that each firm maximizes its profit taking the other firm's production choice as given. Suppose that firm 2 produces 20 units of output. How much should firm 1 produce in order to maximize profits, given that q₂= 20?

• A)45/3
• B)23/3
• C)23/2
• D)45/2

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Definitions:

Anterior Pituitary

A glandular part of the pituitary gland responsible for producing and releasing hormones that regulate various bodily functions.

Anterior Pituitary Gland

A major endocrine gland located at the base of the brain, responsible for producing and releasing hormones that regulate many key physiological processes.

Hypothalamus

A region of the brain that regulates many bodily functions, including temperature control, hunger, thirst, emotional behavior, and the circadian rhythm.

Second Messenger

Intracellular signaling molecules released by the cell in response to exposure to extracellular signaling molecules.