14. Let 7; (x;, x-i) denote the twice differentiable profit function for firm i as a function of the amountof a firm controls x; (price or quantity) and the amount of what the other firm controls x-i. Strategiccomplementarity:a. Means that> 0 for all i.b. Implies that the best-response functions in the space (;, x-i) are downward-sloping.c. Means that< 0 for all i..d. None of the above are correct answers.15. Which of the following statements is true?a. In the linear Cournot model with homogenous products the average Lerner index (weighted by marketshares) is proportional to the Herfindahl index.b. In the linear Bertrand model the Lerner index is proportional to the Herfindahl index.c. In the linear Cournot model with differentiated products, the Herfindahl index is an appropriate measureof market power since it captures the average markup in equilibrium.d. All of the above are correct answers.

Strategic complement is the concept in the game theory where 2 players mutually support each other.…

14. Let 7; (xi,x-i) denote the twice differentiable profit function for firm i as a function of the amount of a firm controls x; (price or quantity) and the amount of what the other firm controls x-i. Strategic complementarity: a. Means that 2 0 for all i. dx¿ðx-i b. Implies that the best-response functions in the space (xi, x-i) are downward-sloping. c. Means that Tii,P-i)< 0 for all ¿.. d. None of the above are correct answers.

14. Let 7; (xi,x-i) denote the twice differentiable profit function for firm i as a function of the amount of a firm controls x; (price or quantity) and the amount of what the other firm controls x-i. Strategic complementarity: a. Means that 2 0 for all i. dx¿ðx-i b. Implies that the best-response functions in the space (xi, x-i) are downward-sloping. c. Means that Tii,P-i)< 0 for all ¿.. d. None of the above are correct answers.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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9. Two firms compete by choosing price. Their demand functions are q1 = 20 – pı + P2 and q2 = 20 – P2 + P1. Marginal costs are zero a) Suppose the two firms set their prices at the same time. Find the resulting NE. What 2 price will each firm charge, how much will it sell, and what will its profit be? b) Suppose Firm 1 sets its price first and then Firm 2 sets its price. What price will each firm charge, how much will it sell, and what will its profit be? c) Suppose there are three ways this game can be played: both firms set price at the same time; firm 1 sets its price first; firm 2 sets its price first. If firm 1 can choose among these options, which would it prefer?
6. Suppose that identical duopoly firms have constant marginal costs of $10 per unit. Firm 1 faces a demand function of q1 = 100– 2p1+p2, where q1 is Firm l's output, pi is Firm l's price, and p2 is Firm 2's price. Similarly, the demand Firm 2 faces is q2 = 100– 2p2+P1. Solve for the NE.
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3 In a Cournot market with two firms, the inverse market demand curve is P=50-2Q, where Q=q1+q2(Firm 1’s output is ; Firm 2’s output is ). Both firms have a constant marginal cost of 14. If Firm 2 produces 12 units of output, how much should Firm 1 produce? Group of answer choices 3 6 0 12
Please no written by hand solution
4
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