The Inverse Demand for Tacos Is Given by P =

question 105

Essay

The inverse demand for tacos is given by P = 10 - 0.02Q, where P is the price per taco and Q is the total number of tacos brought to market. There are two taco shops in the local market. Shop 1's cost function is given by C₁ = 0.01q₁², where q₁ is the number of tacos it brings to market. Shop 2's cost function is given by C₂ = 0.01q₂², where q₂ is the number of tacos it brings to market. Given that the two shops compete by setting output (Cournot), answer the following. Let Q = q₁ + q₂.
a. What is shop 1's profit function?
b. What is shop 2's profit function?

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Definitions:

Time Warp

A hypothetical alteration of time that creates a discrepancy between it and the chronological sequence.

Win-lose

A negotiation or conflict resolution outcome where one party's gain is equivalent to another party's loss, creating a competitive and adversarial scenario.

Integrative Negotiations

A negotiation approach aimed at finding mutually beneficial solutions by addressing the interests and needs of all parties involved.

Labor Unions

Organizations that represent the collective interests of workers in negotiations with employers about wages, working conditions, and benefits.