Consider two product designers that compete in terms of where to place their product in the product space. Assume the product space is the interval from 0 to 1, including the end points. The prices of the product are fixed. Product designers place their product simultaneously in the product space. Consumer's ideal product is spread out uniformly over the product space. Consumers like to choose their ideal product. If they cannot get their ideal product, they incur a disutility that depends linearly on the distance from their ideal product. (The disutility only depends linearly on the distance from their ideal product.) Each consumer has enough income to buy one product even if the distance from their own ideal product is 1. a. Where will the two products be placed in the Nash equilibrium if the locations of the product in the product space are chosen simultaneously? Explain.

Consider two product designers that compete in terms of where to place their product in the product space. Assume the product space is the interval from 0 to 1, including the end points. The prices of the product are fixed. Product designers place their product simultaneously in the product space. Consumer's ideal product is spread out uniformly over the product space. Consumers like to choose their ideal product. If they cannot get their ideal product, they incur a disutility that depends linearly on the distance from their ideal product. (The disutility only depends linearly on the distance from their ideal product.) Each consumer has enough income to buy one product even if the distance from their own ideal product is 1. a. Where will the two products be placed in the Nash equilibrium if the locations of the product in the product space are chosen simultaneously? Explain.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: a. If the firm wishes to maximize its total revenue, at what price should it sell its pots? What is…

A: Price elasticity of demand: It measures the percentage change in the quantity demanded for a 1%…

Q: to indicate the now optimum in thir case. As a result of this price change, the quantity of Raman…

A: A Giffen good is a product that people consume more of as the price rises and vice versa. This…

Q: Refer to the graph shown. When price rises from $10 to $30: 60 Price 50 40 30 20 8 10 0 o' A B A1 D…

A: Revenue is the total value or amount by the sale of goods and services by the firm or…

Q: The benefit that John gets from eating an additional grape is called the the grape. 中 A. demand for…

A: Total utility refers to total satisfaction derived from consuming a good. Demand curve shows an…

Q: Does the image of a retail outlet affect the image ofthe brands it carries? Do the brands carried…

A: Similar to brand image, store image refers to the target audience's view of the retail outlet and…

Q: 5.

A: Given Information: Elasticity of demand for firm's Product = -3 Advertising elasticity of demand =…

Q: two goods Folger can afford. Move point A to mark the 110 combination of the two goods he will…

A: Answer: According to the above figure, point A lies where the consumer consumes 6 books and 50 cups…

Q: Consumers maximízestheirutiliy when Ybren a. The marginal utility of each good is equal 6. The…

A: Consumer maximizes his utility at the point when, MUX/PX = MUY/PY, where X and Y are the two…

Q: how does each consumers indivual consumer surplus change

A: Introduction:Consumer surplus represents the economic gain that consumers experience when they buy a…

Q: The table shows the average income of households and the quantity demanded of products M and N at…

A: Price elasticity of demand refers to the responsiveness of the quantity demand due to change in the…

Q: economy. Ari needs to book a flight between Minneapolis and Los Angeles and has a choice between…

A: Marginal utility is the increase in total utility gained from increasing the consumption of the…

Q: Number of Sodas per day Total Utility Marginal Utility 1 20 35 3 47 12 4 10 7 inishing marginal…

A: Change in the total utility when one additional unit of commodity is consumed, is called marginal…

Q: Answer this question

A: Find the marginal utility :- Marginal Utility = Change in total utility/Change in Units Bought For 1…

Q: 21. What happens to the demand fo gond it Leplel iE a The deanand decieasca and ths demand su sihite…

A: Here, we see that the price of a complement good increases.

Q: The total utility of 6 units of good X is 50 and the total utility of 8 units of good X is 80. The…

A: Marginal vs Total Utility:Utility is the benefit or satisfaction consumers get from consumption.…

Question

urgntly

8. Consider two product designers that compete in terms of where to place their product in
the product space. Assume the product space is the interval from 0 to 1, including the end
points. The prices of the product are fixed. Product designers place their product
simultaneously in the product space. Consumer's ideal product is spread out uniformly
over the product space. Consumers like to choose their ideal product. If they cannot get
their ideal product, they incur a disutility that depends linearly on the distance from their
ideal product. (The disutility only depends linearly on the distance from their ideal product.)
Each consumer has enough income to buy one product even if the distance from their own
ideal product is 1.
a. Where will the two products be placed in the Nash equilibrium if the locations of the
product in the product space are chosen simultaneously? Explain.
b. What are the socially optimal locations, i.e. the best locations from society's point of
view that minimise transportation cost? Are the locations in the Nash equilibrium
different from the socially optimal locations? Explain.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 5 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

1) What is total cost at the profit-maximizing quantity? 2) What is the profit at the profit-maximizing quantity? 3) What is total variable cost at the profit-maximizing quantity?
7.1
Since the 1970s, the percent of income spent on apparel in the U.S. has O increased O not changed O decreased
Why tY not substituted for T?
Price per arginal Utility Fron Current Consumption Product Unit $ 10 20 20 30 The table shows the marginal utite derived trom curent consumpton leves of three new products. A B and C at are being sold in the maet at the prces isted The contumer can imniediately gan the most extra total utity by winching spending from Mnple Choce ANE
741 Ny 7:0 Mond Content X + ultra/courses/_99030_1/cl/outline manipic cempo me manipic accompis. INIU Force Completion. This test can be saved and resumed later. BILLETTE Your answers are saved automatically. * Question Completion Status: QUESTION 1 The goal of the consumer is to maximize the total utility or satisfaction derived from their purchase choices, given the unique budget constraint. To calculate total utility of a given combination of T-shirts and movies, one would use the following approach: O a. For a given combination of T-shirts and movies, survey a group of individuals to determine an average for utils to be assigned to the number of T-shirts and movies. O b. For a given combination of T-shirts and movies, use Google to identify the number of utils associated with the number of T-shirts and movies and thenlum them. O c. For a given combination of T-shirts and movies, assign a number of utils to that combination. O d. Use utils as a measure of utility, assigning a…
13| Marzinal costis the change is cot thar sesuliy IroI & OnG UNILICICAGANI 2. Price b. Cost 00m 化: d. Kevenue Ostout Dice
Assume you have your car broken down just before the weekend. You value your weekend trip as muchas v and if you have to stay home you get the zero utility. There are two dealerships in your town. Atthe beginning of the day they simultaneously choose a price for repair. Dealers know that when you cometo one of them and observe the price, you can always call to another dealer to make an inquiry about hisprice. The call is costless. The other dealer, however, can be occupied for this day. Assume, this happenswith probability which is a common knowledge (but the dealers do not know whether the other dealer isoccupied or not). Assume zero repair cost for the dealer and find a symmetric equilibrium of the game.
If the local electr icity ulilily wanls loraiserevenues. il should ils price because demand for clectricity is likcly to be Iower; inelastic ralse; elastic raise; pertectly inelastir raise; inelastic
Please help me with the chart? I don't understand it
None