w14 Question 14, continued(b).Confirm that q = 60 and q = 50 is a Nash equilibrium to this output game. [Hint: use yourresult in (a) to establish that this output for Alex is a best response to Hayley's. Then verify,at the given outputs, that Hayley's choice is also a best response to Alex's output.]Suppose that Hayley's unit costs are higher than Alex's: MCh = ACh = 20. Question 14Haley - operate as duopolists, simultaneously choosing what output to bring to market. Themarket demand curve is given byConsider a Cournot-output game in which two firms - Alex and1p= 100 -(la + 9h):where qa is the output Alexs brings to market and q, is the output that Hayley brings to market.Suppose that Alex believes that Hayley will bring ĝn, units to market. If Alex's(a).marginal and average costs are constant at MC, = AC. = 15, how much output should Alexbring to market given her belief that Hayley brings qn?

We can solve the given problem using the best responses.

Question 14, continued (Ь). Confirm that = 60 and q = 50 is a Nash equilibrium to this output game. [Hint: use your result in (a) to establish that this output for Alex is a best response to Hayley's. Then verify, at the given outputs, that Hayley's choice is also a best response to Alex's output.] Suppose that Hayley's unit costs are higher than Alex's: MC, = ACh = 20.

Question 14, continued (Ь). Confirm that = 60 and q = 50 is a Nash equilibrium to this output game. [Hint: use your result in (a) to establish that this output for Alex is a best response to Hayley's. Then verify, at the given outputs, that Hayley's choice is also a best response to Alex's output.] Suppose that Hayley's unit costs are higher than Alex's: MC, = ACh = 20.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.

Question

w14

Question 14
Haley - operate as duopolists, simultaneously choosing what output to bring to market. The
market demand curve is given by
Consider a Cournot-output game in which two firms - Alex and
1
p= 100 -
(la + 9h):
where qa is the output Alexs brings to market and q, is the output that Hayley brings to market.
Suppose that Alex believes that Hayley will bring ĝn, units to market. If Alex's
(a).
marginal and average costs are constant at MC, = AC. = 15, how much output should Alex
bring to market given her belief that Hayley brings qn?

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