Two Companies Are the Only Snowplow Merchants in a Small

question 60

Essay

Two companies are the only snowplow merchants in a small town. Inverse market demand curve is P = 100 - 10Q, where Q = q₁ + q₂. (Firm 1's output = q₁; Firm 2's output = q₂.) Each firm has marginal costs of $25. What is the Nash equilibrium in this market?

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Definitions:

Gross Profit Percentage

A financial ratio expressing gross profit as a percentage of revenue, indicating the efficiency of production or service delivery.

Net Profit Margin Percentage

This is a financial metric that represents the percentage of revenue that remains as profit after all operating expenses, interest, taxes, and preferred stock dividends have been deducted from a company's total revenue.

Cost of Goods Sold Percentage

A ratio that compares the cost of goods sold to the total sales revenue, indicating the efficiency of production and pricing.

Asset Turnover Ratios

Ratios that capture how efficiently a company uses its assets.