Answered: < 1. P=20-Q 91 = {4,6} 92 = {4,6} =…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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This is game theory question/ Quantity Competition and Nash Equilibrium

I think the answers are stated in the picture. I just need an explanation about how they came up with these numbers. Thank you

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1. P=20-Q
91 = {4,6}
92 = {4,6}
=
C(91)-291
C(92)=592
Where Q=91 +92
4
6
Fi
니
6
40,28 32, 30]
48 20 36, 18
2. P 43 2Q
91 = {5,9}
Where Q=91 +92
92 = {5, 9}
Fi
5
9
C(91) = 291
C(92) = 92 +5
5
105,105
651121
117 65
45,49
W

Definition Definition Economic decision-making framework that analyzes how different players optimize their outcomes with given pay-offs corresponding to their available strategies. The assumptions of game theory are: The number of players or competitors are finite/limited; All participants are rational The rules of the game are known to every player; and Each participant has a finite set of actions. A common way in which game theory is presented as an ( m x n ) matrix in which m represents the strategies of row player and n represents the strategies of column player. There are several limitations of game theory: Many businesses have a large number of competitors, and selecting an optimal strategy in these circumstances is difficult; Real-life business operating environments are full of uncertainty and difficult to model as a game theory; and The assumption of rationality and utility maximization isn't always an accurate portrayal of human nature.

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