題組內容

II. The production function of Firm A is

$$q^A = \min\{2L, 2K\}.$$

Firm A is a price taker at the factor market. The unit price of L is 1, and the unit price of K is r > 0. The inverse demand at the product market is p = 1 - Q, where p is the market price and Q the market quantity.

4. (4%) Suppose that Firm \( A \) and Firm \( B \) engage in Bertrand competition and simultaneously choose their own price. Find out the equilibrium market price and profit of the two firms.