← Consider a market in which there are two firms: A and B. Each firm produces a differentiated product and chooses its price. Assume that each firm can set price equal to $60 or $70. The payoffs associated with each set of prices are shown. If the firms choose price simultaneously, then the Nash equilibrium price for firm A is If firm A chooses price first and can commit to that price, then firm A will set its price equal to A. $60; $70 OB. $70; $70 OC. $60; $60 OD. $70; $60 Firm B's Price $60 $70 $2700 $2475 $60 $2700 $3375 Firm A's Price $3375 $3300 $70 $2475 $3300
← Consider a market in which there are two firms: A and B. Each firm produces a differentiated product and chooses its price. Assume that each firm can set price equal to $60 or $70. The payoffs associated with each set of prices are shown. If the firms choose price simultaneously, then the Nash equilibrium price for firm A is If firm A chooses price first and can commit to that price, then firm A will set its price equal to A. $60; $70 OB. $70; $70 OC. $60; $60 OD. $70; $60 Firm B's Price $60 $70 $2700 $2475 $60 $2700 $3375 Firm A's Price $3375 $3300 $70 $2475 $3300
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Consider a market in which there are two firms: A and B. Each
firm produces a differentiated product and chooses its price.
Assume that each firm can set price equal to $60 or $70. The
payoffs associated with each set of prices are shown.
If the firms choose price simultaneously, then the Nash
equilibrium price for firm A is
If firm A chooses price first
and can commit to that price, then firm A will set its price equal
to
OA. $60; $70
OB. $70; $70
OC. $60; $60
OD. $70; $60
C
Firm B's Price
[
$60
$70
$2700
$2475
$60
$2700
$3375
]
Firm A's Price
$3375
$3300
$70
$2475
$3300](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F48b62f92-252f-4977-a601-faad806edb11%2F258676e7-4bc6-46b9-861f-c9ce4921938c%2Flsp5p5_processed.jpeg&w=3840&q=75)
Transcribed Image Text:K
Consider a market in which there are two firms: A and B. Each
firm produces a differentiated product and chooses its price.
Assume that each firm can set price equal to $60 or $70. The
payoffs associated with each set of prices are shown.
If the firms choose price simultaneously, then the Nash
equilibrium price for firm A is
If firm A chooses price first
and can commit to that price, then firm A will set its price equal
to
OA. $60; $70
OB. $70; $70
OC. $60; $60
OD. $70; $60
C
Firm B's Price
[
$60
$70
$2700
$2475
$60
$2700
$3375
]
Firm A's Price
$3375
$3300
$70
$2475
$3300
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