Consider the following oligopolistic market. In the first stage, Firm 1 chooses quantity q. Firms 2 and 3 observe Firm 1's choice, and then proceed to simultaneouslychoose q2 and q1, respectively.Market demand is given by p(O) = 100 – Q, and Q = q1 + 42 + 41. Firm 1's costs are c, (41) = 34, firm 2's costs are cz(4,) = 34; and firm 3's costs arecs(qs) = 3q,.Starting from the end of the game, you can express Firm 2's best response function in terms of q and q3, and you can similarly express Firm 3's best responsefunction in terms of qi and q2. Using these, answer the following questions.a) If Firm 1 chooses q1 = 9, what quantity will Firm 2 choose?b) If Firm 1 chooses qi = 100, what quantity will Firm 2 choose?c) in the subgame perfect Nash equilibrium of this game, firm 1 produces what quantity?d) In the subgame perfect Nash equilibrium of this game, firm 2 and firm 3 each produce what quantity?

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Consider the following oligopolistic market. In the first stage, Firm 1 chooses quantity q. Firms 2 and 3 observe Firm 1's choice, and then proceed to simultaneously choose q; and q, respectively. Market demand is given by PO) = 100 - 0, and Q= q +9: +4. Firm t's costs are c, (q) = 341. ferm 2's costs are cy(q,) = 30; and firm 3's costs are Starting from the end of the game, you can express Firm 2's best response function in terms of q and g, and you can similarly express Firm 3's best response function in terms of q and q. Using these, answer the following questions. a) Firm 1 chooses q = 9, what quantity will Firm 2 choose? b) f Firm 1 chooses qi = 100, what quantity wil Firm 2 choose? e) in the subgame perfect Nash equilibrium of this game, firm 1 produces what quantity? d) in the subgame perfect Nash equilibrium of this game, firm 2 and ferm 3 each produce what quantity?

Consider the following oligopolistic market. In the first stage, Firm 1 chooses quantity q. Firms 2 and 3 observe Firm 1's choice, and then proceed to simultaneously choose q; and q, respectively. Market demand is given by PO) = 100 - 0, and Q= q +9: +4. Firm t's costs are c, (q) = 341. ferm 2's costs are cy(q,) = 30; and firm 3's costs are Starting from the end of the game, you can express Firm 2's best response function in terms of q and g, and you can similarly express Firm 3's best response function in terms of q and q. Using these, answer the following questions. a) Firm 1 chooses q = 9, what quantity will Firm 2 choose? b) f Firm 1 chooses qi = 100, what quantity wil Firm 2 choose? e) in the subgame perfect Nash equilibrium of this game, firm 1 produces what quantity? d) in the subgame perfect Nash equilibrium of this game, firm 2 and ferm 3 each produce what quantity?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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