In the lecture, we have been assuming that firms can charge any price they want, for instance, $1.2745. In reality, firms usually only specify the dollar and the cent of a good. For instance, a firm may only be able to charge $1.27 or $1.28 instead of $1.2745 for a good. Under this more realistic assumption, consider a two-firm Bertrand competition game where both firms have a constant marginal cost of $2. The market demand function is Qlp)=10-p. In this game, is ($2, $2) a Bertrand equilibrium? Is ($2.01, $2.01) a Bertrand equilibrium? (In these vectors, the first dimension refers to the price charged by firm 1, and the second dimension refers to that of firm 2. Since Bertrand equilibrium is the Nash equilibrium in the Bertrand competition model, you can follow the definition of Nash equilibrium to verify if the described strategy profile is a Bertrand equilibrium.) Yes. Yes. O Yes. No O No. Yes. No. No.

MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
icon
Related questions
Question
A4
In the lecture, we have been assuming that firms can charge any price they want, for instance,
$1.2745. In reality, firms usually only specify the dollar and the cent of a good. For instance, a firm
may only be able to charge $1.27 or $1.28 instead of $1.2745 for a good. Under this more realistic
assumption, consider a two-firm Bertrand competition game where both firms have a constant
marginal cost of $2. The market demand function is Q(p)=10-p. In this game, is ($2, $2) a Bertrand
equilibrium? Is ($2.01, $2.01) a Bertrand equilibrium? (In these vectors, the first dimension refers to
the price charged by firm 1, and the second dimension refers to that of firm 2. Since
Bertrand equilibrium is the Nash equilibrium in the Bertrand competition model, you can follow the
definition of Nash equilibrium to verify if the described strategy profile is a Bertrand equilibrium.)
Yes. Yes.
O Yes. No
O No. Yes.
No. No.
Transcribed Image Text:In the lecture, we have been assuming that firms can charge any price they want, for instance, $1.2745. In reality, firms usually only specify the dollar and the cent of a good. For instance, a firm may only be able to charge $1.27 or $1.28 instead of $1.2745 for a good. Under this more realistic assumption, consider a two-firm Bertrand competition game where both firms have a constant marginal cost of $2. The market demand function is Q(p)=10-p. In this game, is ($2, $2) a Bertrand equilibrium? Is ($2.01, $2.01) a Bertrand equilibrium? (In these vectors, the first dimension refers to the price charged by firm 1, and the second dimension refers to that of firm 2. Since Bertrand equilibrium is the Nash equilibrium in the Bertrand competition model, you can follow the definition of Nash equilibrium to verify if the described strategy profile is a Bertrand equilibrium.) Yes. Yes. O Yes. No O No. Yes. No. No.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 2 images

Blurred answer
Recommended textbooks for you
MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
Statistics
ISBN:
9781119256830
Author:
Amos Gilat
Publisher:
John Wiley & Sons Inc
Probability and Statistics for Engineering and th…
Probability and Statistics for Engineering and th…
Statistics
ISBN:
9781305251809
Author:
Jay L. Devore
Publisher:
Cengage Learning
Statistics for The Behavioral Sciences (MindTap C…
Statistics for The Behavioral Sciences (MindTap C…
Statistics
ISBN:
9781305504912
Author:
Frederick J Gravetter, Larry B. Wallnau
Publisher:
Cengage Learning
Elementary Statistics: Picturing the World (7th E…
Elementary Statistics: Picturing the World (7th E…
Statistics
ISBN:
9780134683416
Author:
Ron Larson, Betsy Farber
Publisher:
PEARSON
The Basic Practice of Statistics
The Basic Practice of Statistics
Statistics
ISBN:
9781319042578
Author:
David S. Moore, William I. Notz, Michael A. Fligner
Publisher:
W. H. Freeman
Introduction to the Practice of Statistics
Introduction to the Practice of Statistics
Statistics
ISBN:
9781319013387
Author:
David S. Moore, George P. McCabe, Bruce A. Craig
Publisher:
W. H. Freeman