Game Theory
"In a market with two producers, the equilibrium profits for the two duopolists do not depend on whether the duopolists set prices or quantities."
True or false? Explain your answer.
Answer : The answer is False.
By setting price and quantity level the producer get revenue. If this revenue is higher than the cost then the producer earn profit. But if this revenue is lower than the cost then the producer face loss. So, the profit depends on price and quantity level setting. Therefore, the given statement is false.
Game Theory "In a market with two producers, the equilibrium profits for the two duopolists do...
Market demand for two sellers of homogeneous products is Q = 10 - 2P. Each has marginal cost c = 1. Suppose they compete as capacity-constrained Bertrand duopolists. A) Calculate the equilibrium capacities, prices, and profits. B) Now suppose they compete as Cournot duopolists. Calculate the equilibrium quantities, price, and profits. C) Compare the two equilibria.
Imagine you and your friends have created a new prototype of an electric car and you are discussing the possibility of opening a start-up to produce and sell it. Your big shot is represented by the US! Even though it is still a market niche, US electric car demand is high enough to allow you high returns to your investments. To this extent, you start gathering information to be able to draw a production plan. Yet, there is a big...
EC202-5-FY 10 9Answer both parts of this question. (a) Firm A and Firm B produce a homogenous good and are Cournot duopolists. The firms face an inverse market demand curve given by P 10-Q. where P is the market price and Q is the market quantity demanded. The marginal and average cost of each firm is 4 i. 10 marks] Show that if the firms compete as Cournot duopolists that the total in- dustry output is 4 and that if...
Consider the market for coffee beans. Suppose there are only two producers of coffee beans, Colombian and Brazil. In years with very successful (large) crops, these two countries may voluntarily agree to restrict the amount of coffee they put on the market, in order to keep prices higher than they otherwise would be. Suppose a “successful” crop is 18 million bags for each country and the resulting price is $100 per bag of coffee. If they were going to withhold...
16:29 Back Problem Set 2 ECON 461 Problem Set 2 Summer 2019 Each qustion will receive equal weight in grading 1. Consider a duopoly in which two firms produce difierent varieties of a differentiated product at constant average and marginal cost 4 per unit. Let the equations of the inverse demand curves be P 700- 7 P-200- +9 (both equations valid wheree the implied prices and quantities are nonnega tive) (a) find Nash equilibrium prices, quantities, and payoffs for a...
Game Theory Economics If its stage game has exactly one Nash equilibrium, how many subgame perfect equilibria does a two-period, repeated game have? Explain. Would this answer change if there were T periods, where T is any finite integer?
Mathematical Question 3 (30pts) 3. Consider two firms are performing Cournot price competition in two differentiated goods markets. Firm 1 produces goods 1, and firm 2 produces goods 2, and two market demand functions are given by 91 (P1,P2) = 12-2p1 + P2 and 921,P2) = 12-2p2 + P 1. Furthermore, assume that the two firms have the same cost function such that fixed cost is $20 and variable cost is zero. a. (10pts) Calculate the equilibrium prices, quantities and...
Exercise 13.1 Suppose that two Japanese companies, Hitachi and Toshiba, are the sole producers (i.e., duopolists) of a microprocessor chip used in a number of different brands of personal computers. Assume that total demand for the chips is fixed and that each firm charges the same price for the chips. Each firm’s market share and profits are a function of the magnitude of the promotional campaign used to promote its version of the chip. Also assume that only two strategies...
Do You agree or not with the statement: Trade is like a football game, there is eventual winner and loser of the game. Explain why you agree or disagree and support your answers. True or False and explain: An equilibrium at the grocery store is when all of the shelves are full of products. True or False and why? All markets eventually come to equilibrium. Will they come to equilibrium at the same time for all markets - like for...
2. Two firms produce homogeneous products. Market demand is given by Q = 40-P, and each firm faces a marginal cost of production of 4 per unit The timing of the game is as follows. In Period 1, firm 1 chooses the quantity q it will sell. In Period 2, firm 2 (who observed firm 1s choice in period 1) chooses whether or not to enter the market. If firm 2 chooses to enter it must pay an entry fee...