QUESTION 10Suppose there are two firms that produce an identical product.The demand curve for the product is given byP = 62 - Qwhere Q is the total quantity produced by the two firms.Both firms choose their individual quantities qı20 and q22 0 simultaneously. Each firm has a marginal cost of 37.What is the market price when both firms produce the quantities in the unique Nash equilibrium?Give your answer as a number to two decimal places.

We have , P = 62 - Q MC = 37 Since the firms are choosing Quantities , they are playing cournot.

Answered: QUESTION 10 Suppose there are two firms…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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4. Two firms face the following payoff matrix, where each is choosing whether to charge a low or high price: Firm 1 Low (2,0) (0,7) High Firm 2 Low (1,2) High (6,6) Is there any pure-strategy Nash equilibrium? What is the mixed-strategy Nash equilibrium?
Suppose two firms, A and B, have a cost function of ?(??) = 30??, for ? = ?, ?. The inverse demand for the market is given by ? = 120 − ?, where Q represents the total quantity in the market, ? = ?? + ??. 1. Solve for the firms’ outputs in a Nash Equilibrium of the Cournot Model. 2. Let Firm A be the first mover, and Firm B be the second mover. Solve for the firms’ outputs in a SPNE of the Stackelberg Model.
Time remaining: 00:09:51 Economics The market demand function is Q=10,000-1,000p. Each firm has a marginal cost of m=$0.16. Firm 1, the leader, acts before Firm 2, the follower. Solve for the Stackelberg-Nash equilibrium quantities, prices, and profits. Compare your solution to the Cournot-Nash equilibrium. The Stackelberg-Nash equilibrium quantities are: q1=___________ units and q2=____________units The Stackelberg-Nash equilibrium price is: p=$_____________ Profits for the firms are profit1=$_______________ and profit2=$_______________ The Cournot-Nash equilibrium quantities are: q1=______________units and q2=______________units The Cournot-Nash equilibrium price is: p=$______________ Profits for the firms are profit1=$_____________ and profit2=$_______________
PLEASE CHECK THIS HOW TO SOLVE PLEASE TEACH EXPLAIN STEP BY STEP
Two firms, A and B, sell the same good X in a market with total demand Q = 100 – P. The two firms compete on quantities and decides how much to produce simultaneously. Firm A cost function is C(qA) = 40qA. Firm B cost function is C(qB) = 60qB. 1. Find the best reply functions of both firms and represent them in a graph. 2. Find the quantity produced by each firm in a Nash equilibrium. 3. Find the firms and consumers surplus. 4. Compare the surplus of firms found above with the surplus arising when both firm cooperate to sustain a monopoly outcome. 5. Assume now that A and B compete as in a Stackelberg model. A chooses first and B chooses after observing the choice of A. Find equilibrium quantities produced by each firm and the market equilibrium price.
The demand for a product is Q = a - P/2. If there are 4 firms in an industry and marginal cost is MC = 20, then the price in Nash equilibrium is P = 56. What is a?
Question 2 (Choices Involving Strategy): Suppose there are two competing Gyms in a local town. Each gym is individually owned and has three pricing levels to choose from: Low, Medium and High (PL,PM, and PH). Consider the table below as the outcomes for each combination of strategies (they are yearly profits in the thousands). Can you predict the outcome using ONLY iteratively dominated strategies? Why or why not? Find the Nash Equilibrium(a) using best responses. Is this the best outcome? Now, suppose that there was a sudden increase in the cost of equipment that meant the low price was no longer viable, and both choosing the medium price level meant only 50 (thousand) profit for each gym. Nothing else changes. What is the pure and mixed strategy Nash equilibrium of this new game? Gym 1 is on the left and Gym 2 is on the top. The first number inside every box is Gym 1's profit and the second (after the comma) is Gym 2's profit. (10 Marks) PL PMPH PL 125, 125 200, 75 375,50 PM 75, 250…
Fill in the blanks: Consider the department store market that has two rivals, DJs and Myer. Each firm can choose to either Advertise or Not Advertise. These choices are made simultaneously. The payoffs are given below in the following figure.
Suppose there are only two firms that sell smartphones, Flashfone and Pictech. The payoff matrix that follows shows the profit (in millions of dollars) each company will earn, depending on whether it sets a high or low price for its phones. For example, the lower-left cell shows that if Flashfone prices low and Pictech prices high, Flashfone will earn a profit of $6 million and Pictech will earn a profit of $1 million. Assume this is a simultaneous game and that Flashfone and Pictech are both profit-maximizing firms.
O Cell A O Cell C O Cell E O Cell I None of the above
2
Problem 5.1. The inverse market demand for printer paper is given by P = 400 – 2Q. There are two firms who compete to produce this paper, each with a marginal cost of production equal to c = 40 over a large range of output (ie, assume constant marginal cost). The two firms compete in quantities, in other words they each simultaneously choose a quantity to produce (Cournot competition). Derive the Cournot-Nash equilibrium of this game. Please write final answers in the boxes, showing work in blank areas. (a) The reaction function for each firm. 91 (92): 92 (91) (b) Optimal output q for each firm. 92 = р = = π1 = (c) Market price (from demand curve). (d) Firm profits. 92 = π2 =

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