Price Theory<Assignment 2 { Market Power Two rms produce a homogeneous product. Market demand for the product is given by the equation, Qd=500000-800P Firms 1 and 2 have marginal costs of MC 1= 65 and MC2= 120 respectively. Firms compete by simultaneously selecting the quantity of output that they will produce for sale in the market Question 1: Rearrange the demand function to nd inverse demand for this market. (2 Marks) Question 2: Find the residual demand function for each rm, and the corresponding marginal revenue func... More