(Q: 14-3300957] Consider an oligopolistic market with 13 identical firms that choose their profit-maximizing quantities simultaneously. If the own-price elasticity of demand at the profit-maximizing quantity is - 0.1058 for each firm, what is the Lerner Index of Oligopoly Power in this market? O A. 0.4363 *B. 0.7271 Xc. 0.5453 O D. 1.1634 O E. 0.1454

(Q: 14-3300957] Consider an oligopolistic market with 13 identical firms that choose their profit-maximizing quantities simultaneously. If the own-price elasticity of demand at the profit-maximizing quantity is - 0.1058 for each firm, what is the Lerner Index of Oligopoly Power in this market? O A. 0.4363 *B. 0.7271 Xc. 0.5453 O D. 1.1634 O E. 0.1454

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter17: Oligopoly

Section: Chapter Questions

Problem 2CQQ

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Ma3. You operate in a duopoly in which you and a rival must simultaneously decide what price to charge for the same homogeneous product. Assume each you and your rival can choose a “low price” or a “high price”. If you each charge a low price, you each earn zero profits. If you each charge a high price, you each earn profits of $3 million. If you charge different prices, the one charging the high price loses $5 million and the one charging the low price makes $5 million. What is the Nash equilibrium for the non-repeated version of this game? Now suppose the game is infinitely repeated. If the interest rate is 10%, can you do better than you could in the non-repeated version of this game? If your answer is “yes”, provide the players’ strategies and any other conditions that must hold.
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