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Suppose we have the following two-player game: Player A Top Bottom 3 -17 Left -5 -2 Player B -7 12 A Determine the equilibrium level of production for each firm (4₁-42). B. Determine the equilibrium market price. C. Determine the profits of the two firms. Right -11 5 A. Does either player have a dominant strategy? B. Suppose that this is a simultaneous game, what is (are) the Nash Equilibrium(s)? C. Suppose instead that this is a sequential game. Draw the extensive form of this game below and find the Nash Equilibrium(s). Question 2 (6 points) The inverse demand for a homogenous-product Cournot duopoly is P = 40-20, where Q=9₁ +92. The marginal cost for each firm is MC₁ = 2 and MC₂ = 6 and the total cost for each firm is TC₁ = 2q₁ and TC₂ = 6qz Question 3 (4 points) Suppose we have a market with the inverse demand for its product given by P = 200-20. Suppose that the entire market is served by a monopolist whose marginal cost curve is MC = 20 +6Q and total cost curve is TC = 200 + 200 + 3Q². What is the profit maximizing price, quantity, and profit for the monopolist? Question 4 (8 points) Suppose that we have a perfectly competitive market with inverse market demand P = 1000-10Q and inverse market supply P = 250+5Q. A. What is the equilibrium price and quantity in this market? B. Suppose the market is populated by identical firms whose total costs are TC = 100+400Q +25Q² and whose marginal costs are MC = 400 + 50Q. How much output should each firm produce in the short run? C. What are each firm's profits? D. How many firms are there currently in the market? What do you think will happen to the number of firms in the long run? Question 5 (6 points) Suppose that you sell a product that is demanded by two different segments of the population (call them X and Y). Suppose that the inverse demand from segment X is Px = 200-20, and the inverse demand from segment Y is Py = 75 -0.5Qy. Suppose that your total cost is TC = 100+400 + 20² and your marginal cost is MC = 40 +4Q. Assume that you are going to segment the market. A. What is the price you would charge to segment X? How much would you sell to segment X and what will your profit be from segment X? B. What is the price you would charge to segment Y? How much would you sell to segment Y and what will your profit be from segment Y? Suppose we have the following two-player game: Player A Top Bottom 3 -17 Left -5 -2 Player B -7 12 A Determine the equilibrium level of production for each firm (4₁-42). B. Determine the equilibrium market price. C. Determine the profits of the two firms. Right -11 5 A. Does either player have a dominant strategy? B. Suppose that this is a simultaneous game, what is (are) the Nash Equilibrium(s)? C. Suppose instead that this is a sequential game. Draw the extensive form of this game below and find the Nash Equilibrium(s). Question 2 (6 points) The inverse demand for a homogenous-product Cournot duopoly is P = 40-20, where Q=9₁ +92. The marginal cost for each firm is MC₁ = 2 and MC₂ = 6 and the total cost for each firm is TC₁ = 2q₁ and TC₂ = 6qz Question 3 (4 points) Suppose we have a market with the inverse demand for its product given by P = 200-20. Suppose that the entire market is served by a monopolist whose marginal cost curve is MC = 20 +6Q and total cost curve is TC = 200 + 200 + 3Q². What is the profit maximizing price, quantity, and profit for the monopolist? Question 4 (8 points) Suppose that we have a perfectly competitive market with inverse market demand P = 1000-10Q and inverse market supply P = 250+5Q. A. What is the equilibrium price and quantity in this market? B. Suppose the market is populated by identical firms whose total costs are TC = 100+400Q +25Q² and whose marginal costs are MC = 400 + 50Q. How much output should each firm produce in the short run? C. What are each firm's profits? D. How many firms are there currently in the market? What do you think will happen to the number of firms in the long run? Question 5 (6 points) Suppose that you sell a product that is demanded by two different segments of the population (call them X and Y). Suppose that the inverse demand from segment X is Px = 200-20, and the inverse demand from segment Y is Py = 75 -0.5Qy. Suppose that your total cost is TC = 100+400 + 20² and your marginal cost is MC = 40 +4Q. Assume that you are going to segment the market. A. What is the price you would charge to segment X? How much would you sell to segment X and what will your profit be from segment X? B. What is the price you would charge to segment Y? How much would you sell to segment Y and what will your profit be from segment Y?
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Question 1 A Dominant Strategy In this game Player A does not have a dominant strategy because the payoff for Player A depends on Player Bs choice Player B also does not have a dominant strategy becau... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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