Homework Answers
Option B is correct
The price charged by both the firms will be $60. This is because charging a price of $60 is a dominant strategy for both the firms. It generates a maximum profit of 1800 and 2250 when they decide to charge a price of $60 irrespective of the strategies selected by the rival.
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11.3 VueSuur JJ Firm's Price 560 570 51800 $1650 Consider a market in which there are...
In a Nash equilibrium O A. some of the players are maximizing their payoffs given the...
In a Nash equilibrium O A. some of the players are maximizing their payoffs given the current behaviour of the other players. O B. all players are receiving the same payoff OC. none of the players could be better off with any other combination of strategies OD. the greatest aggregate welfare is achieved. O E. each player is maximizing their payoffs given the current behaviour of the other players. Firm's Price Consider a market in which there are two firms...
5. Consider two firms selling differentiated varieties of a product, e.g., Coke and Pepsi. Each firm...
5. Consider two firms selling differentiated varieties of a product, e.g., Coke and Pepsi. Each firm j chooses a price pj for its own variety. Since these varieties are close substitutes, the demand that each firm faces depends not only on its own price, but also the price of its competitor. Specifically, the demand for j’s variety is given by Dj (pj , p−j ) = max 0, 60 + p−j − 2pj Suppose that both firms can produce any...
Consider the case of two firms competing in a market. Each firm has a constant marginal...
Consider the case of two firms competing in a market. Each firm has a constant marginal cost equal to $10. The demand function is D(p) = 100 − p (p is the price in cents) Firms are competing by choosing prices simultaneously. When prices are equal, each firm gets exactly one half of the total demand. P must be an integer value. 1. Find all the Nash equilibria of this duopoly game. 2. Calculate each firms profit under any equilibria. 3....
Two firms with differentiated products are competing in price. Firm A and B face the following...
Two firms with differentiated products are competing in price. Firm A and B face the following demand curves: ?? = 70 − 2?? + ?? and ?? = 120 − 2?? + ?? respectively. Assume production is costless. Give equations for and graph each firm’s reaction curve. If both firms set their prices at the same time, what is the Nash equilibrium price, quantity, and profit for each firm? Suppose A sets its price first and then B responds. What...
1. (30 points) There are two firms considering introducing a new product to the market. Each...
1. (30 points) There are two firms considering introducing a new product to the market. Each firm can either set a high price or low price for its product. If both set a low price the market will be shared between the two firms. In this case, each firm expects to make a profit of $2m. If one firm sets a high price while the other sets a low price, the former is expected to make $1m and the latter...
1. (30 points) There are two firms considering introducing a new product to the market. Each...
1. (30 points) There are two firms considering introducing a new product to the market. Each firm can either set a high price or low price for its product. If both set a low price the market will be shared between the two firms. In this case, each firm expects to make a profit of $2m. If one firm sets a high price while the other sets a low price, the former is expected to make $1m and the latter...
1. (30 points) There are two firms considering introducing a new product to the market. Each...
1. (30 points) There are two firms considering introducing a new product to the market. Each firm can either set a high price or low price for its product. If both set a low price the market will be shared between the two firms. In this case, each firm expects to make a profit of $2m. If one firm sets a high price while the other sets a low price, the former is expected to make $1m and the latter...
2. Consider a version of the Hotelling model in which prices are endogenously determined. Two firms...
2. Consider a version of the Hotelling model in which prices are endogenously determined. Two firms sell horizontally differentiated products located at opposite ends of the one-dimensional product space. Firm O is located at 0. Firm 1 is located at 1. M consumers are uniformly distributed between 0 and 1, with each consumer's location giving his most preferred type of product. Each consumer places value v on one unit of his most preferred product, but incurs a transportation cost. AD...
Two firms compete by choosing price. Their demand functions are; Q1=80−P1+P2 and Q2=80+P1+P2. where P1 and...
Two firms compete by choosing price. Their demand functions are; Q1=80−P1+P2 and Q2=80+P1+P2. where P1 and P2 are the prices charged by each firm, respectively, and Q1 and Q2 are the resulting demands. Note that the demand for each good depends only on the difference in prices; if the two firms colluded and set the same price, they could make that price as high as they wanted, and earn infinite profits. Marginal costs are zero. Suppose the two firms set...
Q.2 Two firms (i- 1, 2) produce differentiated produets. The market-clearing price is given by: pl60-lj,...
Q.2 Two firms (i- 1, 2) produce differentiated produets. The market-clearing price is given by: pl60-lj, where is the quantity chosen by firm i and qj the quantity chosen simultaneously by its competitor. The cost function of each firm is C,(a)-10q Q.2.a Find the response functions and show the response functions graphically. Q.2.b Identify the Nash equilibrium. Q.2.c Calculate each firm's equilibrium profit.
In a Nash equilibrium O A. some of the players are maximizing their payoffs given the current behaviour of the other players. O B. all players are receiving the same payoff OC. none of the players could be better off with any other combination of strategies OD. the greatest aggregate welfare is achieved. O E. each player is maximizing their payoffs given the current behaviour of the other players. Firm's Price Consider a market in which there are two firms...
1. (30 points) There are two firms considering introducing a new product to the market. Each firm can either set a high price or low price for its product. If both set a low price the market will be shared between the two firms. In this case, each firm expects to make a profit of $2m. If one firm sets a high price while the other sets a low price, the former is expected to make $1m and the latter...
1. (30 points) There are two firms considering introducing a new product to the market. Each firm can either set a high price or low price for its product. If both set a low price the market will be shared between the two firms. In this case, each firm expects to make a profit of $2m. If one firm sets a high price while the other sets a low price, the former is expected to make $1m and the latter...
1. (30 points) There are two firms considering introducing a new product to the market. Each firm can either set a high price or low price for its product. If both set a low price the market will be shared between the two firms. In this case, each firm expects to make a profit of $2m. If one firm sets a high price while the other sets a low price, the former is expected to make $1m and the latter...
2. Consider a version of the Hotelling model in which prices are endogenously determined. Two firms sell horizontally differentiated products located at opposite ends of the one-dimensional product space. Firm O is located at 0. Firm 1 is located at 1. M consumers are uniformly distributed between 0 and 1, with each consumer's location giving his most preferred type of product. Each consumer places value v on one unit of his most preferred product, but incurs a transportation cost. AD...
Q.2 Two firms (i- 1, 2) produce differentiated produets. The market-clearing price is given by: pl60-lj, where is the quantity chosen by firm i and qj the quantity chosen simultaneously by its competitor. The cost function of each firm is C,(a)-10q Q.2.a Find the response functions and show the response functions graphically. Q.2.b Identify the Nash equilibrium. Q.2.c Calculate each firm's equilibrium profit.
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