The Inverse Demand for Designer Blankets Is Given by P

question 158

Essay

The inverse demand for designer blankets is given by P = 40 - 0.01Q, where P is the price per blanket and Q is the total number of blankets brought to market. Two shops in the market supply specialty blankets. Shop 1's cost function is given by C₁ = 0.02q₁², where q₁ is the number it brings to market. Shop 2's cost function is given by C₂ = 0.02q₂², where q₂ is the number it brings to market. Given that the two shops compete by setting output (Cournot):
a. identify shop 1's reaction function to firm 2's output.
b. identify shop 2's reaction function to firm 1's output.
c. identify the equilibrium output level of each shop and the equilibrium price for blankets.

---

Definitions:

Individual Accountability

Individual accountability involves holding oneself responsible for one's actions and outcomes, emphasizing personal integrity and responsibility.

Morale

The overall attitude, confidence, and satisfaction of an individual or group at a particular time.

Goal Setting

Allows employees to set their own goals.

Procrastination

Putting off until later the things a person should be doing now.