3) Assuming that firms compete a la Cournot, that all firms have the same marginal cost, and that demand is linear, when is price most sensitive to changes in marginal cost: in a market with very few...

Extracted text: 3) Assuming that firms compete a la Cournot, that all firms have the same marginal cost, and that demand is linear, when is price most sensitive to changes in marginal cost: in a market with very few firms or in a market with many firms? Show this formally. [Hint: assume demand p = a - bQ] Bertrand duopoly with b) differentiated products. Demand curves are Consider a given by |p! = 600 – 2q! " p" = 600 – q! - 2q" Suppose that the cost functions are given by (q#) = 60q# , for i = 1, 2. Find the equilibrium outputs, the prices and the profits.