owing market is a duopoly populated only by the companies Alpha and Beta. They produce and sell identical products. The graph below shows the market demand for the product. Both firms face zero marginal cost at every level of output. If one of the firms charges a lower price than the other, the firm charging the lower price will enjoy the entire quantity demanded by all the customers in the market. If the two firms charge the same price, each will have an equal share the quantity demanded at that price. 45 3.5 2.5 82 15 1 0.5 0 0 2 Output Assume both firms have the goal of maximising their own economic profit. If the two firms do not communicate with each other, and they simultaneously choose their own prices, what will be the Nash equilibrium price for both of them? O ass -Demand MR 4

owing market is a duopoly populated only by the companies Alpha and Beta. They produce and sell identical products. The graph below shows the market demand for the product. Both firms face zero marginal cost at every level of output. If one of the firms charges a lower price than the other, the firm charging the lower price will enjoy the entire quantity demanded by all the customers in the market. If the two firms charge the same price, each will have an equal share the quantity demanded at that price. 45 3.5 2.5 82 15 1 0.5 0 0 2 Output Assume both firms have the goal of maximising their own economic profit. If the two firms do not communicate with each other, and they simultaneously choose their own prices, what will be the Nash equilibrium price for both of them? O ass -Demand MR 4

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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