Suppose two firms A and B compete against each other in a Cournot fashion by choosing their quantities. What is the Nash Equilibrium of the game if both firms have a constant marginal cost of 2 and the price in the market is: p(qa + qB) = 20 –2(q4 + qB). O (3, 3) O (2, 2) O (4, 4) O None of the other answers are correct O (5, 5)

Suppose two firms A and B compete against each other in a Cournot fashion by choosing their quantities. What is the Nash Equilibrium of the game if both firms have a constant marginal cost of 2 and the price in the market is: p(qa + qB) = 20 –2(q4 + qB). O (3, 3) O (2, 2) O (4, 4) O None of the other answers are correct O (5, 5)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. Consider the following game in the normal form R 1,2 -1,2 3,2 1,5 M 1,1 2,-1 4,5 1,3 3.4 0,1 5,4 4,1 B 1,-1 N 4,4 6,1 1,4 a) Find the mixed strategy that dominates M b) Find the set B2 c) Find all the Pareto efficient strategy profiles
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The total cost for a product-testing firm is C(q)=70 + 20q2 q= number of products tested Price of a product = average cost Each corporation purchases one product test per year from a product-testing firm in the same city. All other inputs are ubiquitous. Suppose five corporations are initially distributed uniformly, with one corporation in each city (A,B,C,D,E). Is the initial distribution a Nash Equilibrium? Demonstrate it is not by finding how much one corporation would pay if they deviate and move to another city? What is the average price of having two tests conducted? (Which is the price that the corporation would pay if they "live" in a city where two tests are conducted) The average price of moving and thus, having two tests is: $_____
INFINITE REPETITION Consider the infinitely repeated game constructed from the following stage game. b1 b2 a1 8,8 3,13 a2 13,3 0,0 Suppose that both players use the discount factor d to evaluate future payoff streams. What is the smallest value of 5 such that there exists a subgame perfect Nash equilibrium in which the action profile is played in all periods? (Please report your answer in decimal form, rounded if necessary to the nearest 0.01.)
QUESTION 13 Consider a market where two firms (1 and 2) produce differentiated goods and compete in prices. The demand for firm 1 is given by D₁(P₁, P2) = 140 - 2p1 + P2 and demand for firm 2's product is D2 (P1, P2) 140 - 2p2 + P1 Both firms have a constant marginal cost of 20. What is the Nash equilibrium price of firm 1? (Only give a full number; if necessary, round to the lower integer; no dollar sign.)
Find the subgames, convert them into Normal-Forms, find the Subgame Perfect Nash Equilibrium step-by-step.
Table 3. This table shows a game played between two firms, Firm A and Firm B. In this game each firm must decide how much output (Q) to produce: 5 units or 6 units. The profit for each firm is given in the table as (Profit for Firm A. Profit for Firm B). Firm A Q=5 Q=6 Firm B Q=5 (24, 24) (30, 10) Q=6 (10,30) (19, 19) Refer to Table 3. The dominant strategy For Firm A is to produce Select one: O a. 5 units and the dominant strategy for Firm B is to produce 5 units. b. 5 units and the dominant strategy for Firm B is to produce 6 units. c. 6 units and the dominant strategy for Firm B is to produce 5 units. d. 6 units and the dominant strategy for Firm B is to produce 6 units.
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Based on the game depicted in the matrix below, which of the following is true: Player 1 U M D L 4,3 3,2 5,0 Player 2 C 6,0 8,4 9,3 R 6,2 3,6 7,4 OD is a dominant strategy for Player 1 OR is a dominant strategy for Player 2 OL is a dominated strategy for Player 2 O (D,C) is the Nash Equilibrium of the game because it has the highest combined payoff O All of the above