Quantity Price (gallons) Total Revenue (profits) $120 $0 10 $110 1,100 20 $100 2,000 30 $90 2,700 40 $80 3,200 50 $70 3,500 60 $60 3,600 70 $50 3,500 80 $40 3,200 90 $30 2,700 100 $20 2,000 T10 $10 1,100 120 Suppose initially the companies agree to each produce 30 gallons, and sell it at a price of $60. What quantity will each firm end up selling in equilibrium? (Tip: to answer construct a payoff matrix for two Q options for each company: Q = 30 and Q = 40.) Q = 40 It depends on what the other company does Impossible to say; the game has no Nash equilibrium Q = 30

Quantity Price (gallons) Total Revenue (profits) $120 $0 10 $110 1,100 20 $100 2,000 30 $90 2,700 40 $80 3,200 50 $70 3,500 60 $60 3,600 70 $50 3,500 80 $40 3,200 90 $30 2,700 100 $20 2,000 T10 $10 1,100 120 Suppose initially the companies agree to each produce 30 gallons, and sell it at a price of $60. What quantity will each firm end up selling in equilibrium? (Tip: to answer construct a payoff matrix for two Q options for each company: Q = 30 and Q = 40.) Q = 40 It depends on what the other company does Impossible to say; the game has no Nash equilibrium Q = 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

Suppose the following table describes the water supply in a small town. For now, assume the costs of supplying the water are equal to zero.
Price
Total Revenue
Quantity
| (gallons)
(profits)
$120
$0
10
$I10
100,ו
20
$100
2,000
30
$90
2,700
40
$80
3,200
50
$70
3,500
60
$60
3,600
70
$50
3,500
80
$40
3,200
90
$30
2,700
100
$20
2,000
T10
$10
1,100
120
$0
Suppose initially the companies agree to each produce 30 gallons, and sell it at a price of $60. What quantity will each firm end up selling in equilibrium? (Tip: to answer construct a
payoff matrix for two Q options for each company: Q = 30 and Q = 40.)
O Q = 40
O It depends on what the other company does
O Impossible to say; the game has no Nash equilibrium
O Q = 30
Your answer is incorrect.

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