F3. Two firms are competing on price. If they have the same price, they share the market - otherwisethe one with the lowest price captures all demandMarket demand follows Q(P)=100-3PCost is C(Q)=10QFirms can only choose between the following prices: 9, 10, 11, 12.In the Nash equilibrium of this game, what prices are charged?Suggestion: calculate the profits they obtain for each of the price combinations, write down thegame in its normal form (payoff matrix), and then use the underlining method to match bestresponses.U101112

Demand function; Q= 100-3P Total SWcost ; C= 10Q

demand follows Q(P)=100-3P C(Q)=10Q an only choose between the following prices: 9, 10, 11, 12. lash equilibrium of this game, what prices are charged? ion: calculate the profits they obtain for each of the price combi its normal form (payoff matrix), and then use the underlining m es.

demand follows Q(P)=100-3P C(Q)=10Q an only choose between the following prices: 9, 10, 11, 12. lash equilibrium of this game, what prices are charged? ion: calculate the profits they obtain for each of the price combi its normal form (payoff matrix), and then use the underlining m es.

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter10: Monopolistic Competition And Oligopoly

Section: Chapter Questions

Problem 13PAE

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Question

F3.

Two firms are competing on price. If they have the same price, they share the market - otherwise
the one with the lowest price captures all demand
Market demand follows Q(P)=100-3P
Cost is C(Q)=10Q
Firms can only choose between the following prices: 9, 10, 11, 12.
In the Nash equilibrium of this game, what prices are charged?
Suggestion: calculate the profits they obtain for each of the price combinations, write down the
game in its normal form (payoff matrix), and then use the underlining method to match best
responses.
U
10
11
12

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