Consider the following oligopolistic market. In the first stage, Firm 1 chooses quantity q₁. Firms 2 and 3 observe Firm 1's choice, and then proceed to simultaneously choose q2 and q3, respectively. Market demand is given by p(Q) = 100-Q, and Q = 9₁ +92 +93. Firm 1's costs are c₁ (9₁) = 6q₁, firm 2's costs are c₂ (92) = 592 and firm 3's costs are c3(93) = 593- Starting from the end of the game, you can express Firm 2's best response function in terms of q₁ and 93, and you can similarly express Firm 3's best response function in terms of q₁ and 92. Using these, answer the following questions. If rounding is needed, write your answers to 3 decimal places. a) If Firm 1 chooses q₁ = 12. what quantity will Firm 2 choose? b) If Firm 1 chooses q₁ = 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?
Consider the following oligopolistic market. In the first stage, Firm 1 chooses quantity q₁. Firms 2 and 3 observe Firm 1's choice, and then proceed to simultaneously choose q2 and q3, respectively. Market demand is given by p(Q) = 100-Q, and Q = 9₁ +92 +93. Firm 1's costs are c₁ (9₁) = 6q₁, firm 2's costs are c₂ (92) = 592 and firm 3's costs are c3(93) = 593- Starting from the end of the game, you can express Firm 2's best response function in terms of q₁ and 93, and you can similarly express Firm 3's best response function in terms of q₁ and 92. Using these, answer the following questions. If rounding is needed, write your answers to 3 decimal places. a) If Firm 1 chooses q₁ = 12. what quantity will Firm 2 choose? b) If Firm 1 chooses q₁ = 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?
Chapter1: Making Economics Decisions
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![Consider the following oligopolistic market. In the first stage, Firm 1 chooses quantity q₁. Firms 2 and 3 observe Firm 1's choice, and then proceed to simultaneously choose 92 and 93, respectively.
Market demand is given by p(Q) = 100 - Q, and Q = 9₁ +92 +93. Firm 1's costs are c₁ (91) = 6q₁, firm 2's costs are c₂ (92) = 592 and firm 3's costs are c3(93) = 593.
Starting from the end of the game, you can express Firm 2's best response function in terms of 9₁ and 93, and you can similarly express Firm 3's best response function in terms of q₁ and 92. Using these, answer the
following questions.
If rounding is needed, write your answers to 3 decimal places.
a) If Firm 1 chooses q₁ = 12, what quantity will Firm 2 choose?
b) If Firm 1 chooses q₁ = 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?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F39672439-ea06-4c4e-90cd-531486fa09ec%2Fdcad04f3-d80a-4a38-a80b-4d0684377d67%2Ffxj9qt_processed.png&w=3840&q=75)
Transcribed Image Text:Consider the following oligopolistic market. In the first stage, Firm 1 chooses quantity q₁. Firms 2 and 3 observe Firm 1's choice, and then proceed to simultaneously choose 92 and 93, respectively.
Market demand is given by p(Q) = 100 - Q, and Q = 9₁ +92 +93. Firm 1's costs are c₁ (91) = 6q₁, firm 2's costs are c₂ (92) = 592 and firm 3's costs are c3(93) = 593.
Starting from the end of the game, you can express Firm 2's best response function in terms of 9₁ and 93, and you can similarly express Firm 3's best response function in terms of q₁ and 92. Using these, answer the
following questions.
If rounding is needed, write your answers to 3 decimal places.
a) If Firm 1 chooses q₁ = 12, what quantity will Firm 2 choose?
b) If Firm 1 chooses q₁ = 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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