Consider a small town that has only two Sushi restaurants, A and B. Suppose that it...
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Consider a small town that has only two Sushi restaurants, A and B. Suppose that it costs $2 to make each sushi (for each store) and that the relation between sales in each month (q, measured in thousands) and price (p, measured in dollars) for each firm is 1 qi = 24-Pi+2Pj. (a) What is each store's monthly profit as a function of PA and PB? (b) What are the Nash equilibrium prices, quantities, and profits for A and B? (c) Suppose that the two firms work together and collusively choose a joint best price pc. What single price do they choose to maximize their joint profits? Now consider the two restaurants, C and D, engaging in Cournot competition in a different town. Their inverse demands are given as p(Q) = 40-5Q where Q = 91 +92. Costs are c₁ (9₁) = 10g₁ and C2 (92) = 292 + 2q² (d) Find the Nash Equilibrium quantities for each firm. (e) Calculate profit for each firm. Consider a small town that has only two Sushi restaurants, A and B. Suppose that it costs $2 to make each sushi (for each store) and that the relation between sales in each month (q, measured in thousands) and price (p, measured in dollars) for each firm is 1 qi = 24-Pi+2Pj. (a) What is each store's monthly profit as a function of PA and PB? (b) What are the Nash equilibrium prices, quantities, and profits for A and B? (c) Suppose that the two firms work together and collusively choose a joint best price pc. What single price do they choose to maximize their joint profits? Now consider the two restaurants, C and D, engaging in Cournot competition in a different town. Their inverse demands are given as p(Q) = 40-5Q where Q = 91 +92. Costs are c₁ (9₁) = 10g₁ and C2 (92) = 292 + 2q² (d) Find the Nash Equilibrium quantities for each firm. (e) Calculate profit for each firm.
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Answer rating: 100% (QA)
a Each stores monthly profit as a function of pa and PB can be calculated by subtracting the cost of producing each sushi from the revenue generated Lets denote the profit for store A as A and the pro... View the full answer
Related Book For
Microeconomics
ISBN: 978-0321866349
14th canadian Edition
Authors: Christopher T.S. Ragan, Richard G Lipsey
Posted Date:
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