produce. The annual profit payoffs for each firm are stated in the cell of the game matrix, and Firm A's payoffs appear first in the payoff pairs: Firm B - low output Firm B - high output Profit of A: 25 Profit of A: 0 Firm A - low output Profit of B: 25 Profit of B: 35 Profit of A: 30

produce. The annual profit payoffs for each firm are stated in the cell of the game matrix, and Firm A's payoffs appear first in the payoff pairs: Firm B - low output Firm B - high output Profit of A: 25 Profit of A: 0 Firm A - low output Profit of B: 25 Profit of B: 35 Profit of A: 30

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Explain....

2) Consider the following game in which two firms decide how much of a homogeneous good to
produce. The annual profit payoffs for each firm are stated in the cell of the game matrix, and Firm
A's payoffs appear first in the payoff pairs:
Firm B - low output
Firm B - high output
Profit of A: 25
Profit of A: 0
Firm A - low output
Profit of B: 25
Profit of B: 35
Profit of A: 30
Profit of A: 15
Firm A - high output
Profit of B: 15
Profit of B: 5
Find equilibrium quantity in this oligopoly market.

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