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:

Immune System

The complex network of cells, tissues, and organs that work together to defend the body against infections and diseases.

Progressive Tax

A progressive tax is a tax system where the tax rate increases as the taxable amount or income goes up, placing a higher burden on wealthier individuals.

Absolute Amount

A total figure or quantity without any adjustments, reductions, or modifications, representing a raw or unadjusted figure.

Tax Rate

The percentage at which an individual or corporation is taxed.