Consider a market where demand is given by P = 100 - Q. а. Suppose a monopolist with marginal cost equal to 10 supplies the market, find the equilibrium quantity price and profits for the monopolist. b. I Suppose now that two firms who compete via Cournot competition supply the market. They each have marginal cost equal to 10. Find the equilibrium quantity price and profits for each firm. с. Consider a simultaneous move game where the strategies for each firm is to produce according to their best response function in the Cournot equilibrium or half the monopoly quantity. Construct the payoff matrix for this game and find the Nash Equilibrium. Are the firms happy with this outcome, that is by playing other strategies could both firms do better than in the Nash Equilibrium?
Consider a market where demand is given by P = 100 - Q. а. Suppose a monopolist with marginal cost equal to 10 supplies the market, find the equilibrium quantity price and profits for the monopolist. b. I Suppose now that two firms who compete via Cournot competition supply the market. They each have marginal cost equal to 10. Find the equilibrium quantity price and profits for each firm. с. Consider a simultaneous move game where the strategies for each firm is to produce according to their best response function in the Cournot equilibrium or half the monopoly quantity. Construct the payoff matrix for this game and find the Nash Equilibrium. Are the firms happy with this outcome, that is by playing other strategies could both firms do better than in the Nash Equilibrium?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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