Let Firm a Face Demand Curve Q_A = 100 - $P _ { B } = 50 - .5 P _ { A }$

question 14

Multiple Choice

Let firm A face demand curve Q_A = 100 - P_A + .5P_B and firm B face demand curve Q_B = 100 - P_B + .5P_A. Products A and B both have constant marginal cost of production of 10 per unit (and no fixed cost) . Each firm acts as a Bertrand competitor. What is the equation of firm B's (price) reaction function?

• A) \(P _ { B } = 50 - .5 P _ { A }\)
• B) \(P _ { B } = 55 - .25 P _ { A }\)
• C) \(P _ { B } = 55 + .25 P _ { A }\)
• D) \(P _ { B } = 50 + .5 P _ { A }\)

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Definitions:

Unemployment Rate

The percentage of the total labor force that is unemployed but actively seeking employment and willing to work.

Employed

Employed refers to individuals who are working for pay or profit, engaging in a job or business, within a stipulated period.

Unemployed

Refers to individuals who are capable of working and willing to work but cannot find employment.

Misery Index

An economic indicator created by summing the unemployment rate and inflation rate, intending to measure economic discomfort within a country.