The Fudge Makers Compete in a Bertrand Market Structure with Differentiated

question 96

Essay

The fudge makers compete in a Bertrand market structure with differentiated products. The demand curve for Fudge Factory is given by where p_F is the price for fudge at Fudge Factory and p_C is the price at Chocolate Corner. The demand curve for Chocolate Corner is given by Fudge Factory's cost is C_F = 5q_F and Chocolate Corner's cost is C_C = 5q_C. Use calculus for the following.
a. Identify Fudge Factory's profit function and its reaction function.
b. Identify Chocolate Corner's profit function and its reaction function.
c. Identify the equilibrium prices at the two fudge makers.

---

Definitions:

Attachment

An emotional bond between individuals, particularly between a child and caregiver, which is critical for the child's development and psychological security.

Easy Temperament

Refers to a personality disposition noticeable from infancy, characterized by regular biological rhythms, adaptability, and a predominantly positive mood.

Authoritative Parenting

A parenting style characterized by high expectations of maturity and self-regulation, as well as high responsiveness, warmth, and support.

Secure Attachment

A healthy emotional bond formed in early childhood, characterized by trust and a sense of safety in the relationship with the caregiver.