option B Suppose two firms compete as Cournot Oligopolists. The profitfunctions of these two firms areп — (150 — q —92)91 — 209,T2 = (150 – 91 – 92)92 – 2292Which generate the following best response functions.150 – 20 191 =2150 – 20 192 =2a. Plot these reaction functions in a graph with q, on the horizontal axisand q, on the vertical axis.b. Derive, I want to see your work, the Nash equilibrium outcome ofthis game.c. How does the Nash equilibrium change if the demand curve shifts out,a bigger intercept on the demand equation.

Best Response Function of firm1 : q1 = 65 - 0.5q2 Best Response Function of firm 2 : q2 = 65 -…

suppose two firms compete as Cournot Oligopolists. The profit functions of these two firms are T = (150 – q1 – q2)91 – 20q1 T2 = (150 – q1 – q2)92 – 2292 Which generate the following best response functions. 150 – 20 1 92 91 2 150 – 20 1 112

suppose two firms compete as Cournot Oligopolists. The profit functions of these two firms are T = (150 – q1 – q2)91 – 20q1 T2 = (150 – q1 – q2)92 – 2292 Which generate the following best response functions. 150 – 20 1 92 91 2 150 – 20 1 112

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

option B

Suppose two firms compete as Cournot Oligopolists. The profit
functions of these two firms are
п — (150 — q —92)91 — 209,
T2 = (150 – 91 – 92)92 – 2292
Which generate the following best response functions.
150 – 20 1
91 =
2
150 – 20 1
92 =
2
a. Plot these reaction functions in a graph with q, on the horizontal axis
and q, 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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