Consider the following version of the Cournot duopoly game in which Firm 1 and Firm 2...
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Consider the following version of the Cournot duopoly game in which Firm 1 and Firm 2 simultaneously and independently select quantities to produce of an identical good. Firm 1 can produce any nonnegative value for q₁ and Firm 2 can produce any nonnegative value for q2. The price of the good is given by p = 100 29₁ 292. Suppose that each firm produces at a cost of 20 per unit. Both firms want to maximize profits. a.) Write each Firm's total profits as a function of only q₁ and 92. b.) Solve for and graph both Firms' best response functions. c.) What is the Nash Equilibrium? d.) Is it ever a best response for player 1 to produce 25 units? Consider the following version of the Cournot duopoly game in which Firm 1 and Firm 2 simultaneously and independently select quantities to produce of an identical good. Firm 1 can produce any nonnegative value for q₁ and Firm 2 can produce any nonnegative value for q2. The price of the good is given by p = 100 29₁ 292. Suppose that each firm produces at a cost of 20 per unit. Both firms want to maximize profits. a.) Write each Firm's total profits as a function of only q₁ and 92. b.) Solve for and graph both Firms' best response functions. c.) What is the Nash Equilibrium? d.) Is it ever a best response for player 1 to produce 25 units?
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a Firm 1s total profit can be calculated by subtracting its cost from its revenue p 20q Substituting ... View the full answer
Related Book For
Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba
Posted Date:
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