ECON 101 METHOD AND HELP ONLY

Q6. (2 points) Nash equilibrium, monopoly, competition. Assume that there are N firms that can produce and sell mobile phones, where N is a positive integer, and assume that when > > 1 the firms' products are exactly alike (when N = 1 there is just one seller). N is thus a fixed number, and everyone knows which that number is (N is common knowledge). Potential buyers are homogenous in their valuation for mobile phones and each potential buyer consumes at most 1 mobile phone. Suppose that there are 1000 potential buyers and each has a willingness to pay $600 for a mobile phone Assume that each firm's total production costs TO(q) are given by the function TO(q) = 300000 + 200q when q > 0 and TC(q) = 0 when q = 0. Here q denotes the quantity produced by the firm. Assume that firms choose prices and that the firms choose their prices simultaneously and non-cooperatively. a) (1 point) Determine the equilibrium price when N = 1. b) (1 point) Determine the equilibrium price when N > 1