Three firms compete in the style of Cournot. The inverse demand is P(Q) = a - Q. Scenario 1: All three firms have the same constant marginal cost MC = c. Scenario 2:Firm 1 has MC = 0.5c, Firm 2 has MC = c, and Firm 3 has MC = 1.5c. Assume that a > 3c. Which of the following is correct? (Price means the price in Nash equilibrium.)Price in scenario 1 > Price in scenario 2Price in scenario 2 > Price in scenario 1Price in scenario 1 = Price in scenario 2Any of the first three options is possible depending on the value of aAny of the first three options is possible depending on the value of a and c.

As we know that firm achieves it's equilibrium where there marginal cost equals with marginal…

Three firms compete in the style of Cournot. The inverse demand is P(Q) = a - Q. Scenario 1: All three firms have the same constant marginal cost MC = c. Scenario 2: Firm 1 has MC = 0.5c, Firm 2 has MC = c, and Firm 3 has MC = 1.5c. Assume that a > 3c. Which of the following is correct? (Price means the price in Nash equilibrium.) O Price in scenario 1 > Price in scenario 2 O Price in scenario 2 > Price in scenario 1 Price in scenario 1 Price in scenario 2 O Any of the first three options is possible depending on the value of a

Three firms compete in the style of Cournot. The inverse demand is P(Q) = a - Q. Scenario 1: All three firms have the same constant marginal cost MC = c. Scenario 2: Firm 1 has MC = 0.5c, Firm 2 has MC = c, and Firm 3 has MC = 1.5c. Assume that a > 3c. Which of the following is correct? (Price means the price in Nash equilibrium.) O Price in scenario 1 > Price in scenario 2 O Price in scenario 2 > Price in scenario 1 Price in scenario 1 Price in scenario 2 O Any of the first three options is possible depending on the value of a

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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