Suppose two firms compete as Cournot Oligopolists. The profit functions of these two firms are    π_1=(150-q_1-q_2 ) q_1-20q_1 π_2=(150-q_1-q_2 ) q_2-22q_2   Which generate the following best response functions.   q_1=(150-20)/2-1/2 q_2   q_2=(150-20)/2-1/2 q_1     a.  Plot these reaction functions in a graph with q1 on the horizontal axis and q2 on the vertical axis.   b.  Derive, I want to see your work, the Nash equilibrium outcome of this game.    c.  How does the Nash equilibrium change if the demand curve shifts out, a bigger intercept on the demand equation.

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
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Chapter1: Making Economics Decisions
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Instructions: Answer to the best of your ability. Show all of your work, the details, on this excel tab.
 
Suppose two firms compete as Cournot Oligopolists. The profit functions of these two firms are 
 

π_1=(150-q_1-q_2 ) q_1-20q_1


π_2=(150-q_1-q_2 ) q_2-22q_2

 
Which generate the following best response functions.
 
q_1=(150-20)/2-1/2 q_2
 

q_2=(150-20)/2-1/2 q_1

 
 
a.  Plot these reaction functions in a graph with q1 on the horizontal axis and q2 on the vertical axis.
 
b.  Derive, I want to see your work, the Nash equilibrium outcome of this game. 
 
c.  How does the Nash equilibrium change if the demand curve shifts out, a bigger intercept on the demand equation.
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