Microeconomic Theory
12th Edition
ISBN: 9781337517942
Author: NICHOLSON
Publisher: Cengage
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Students have asked these similar questions
Consider the following normal form representation of the standard competition between firm A and
firm B. Each firm can choose either standard A or standard B. Their payoffs are given as follows:
Firm B
A
В
A
Firm A
В
1
1
3
1
(1) (10 points) What's Nash equilibrium (NE) in this game? If there are more than one, find them
all. But there is no NE, state that there is no NE.
(2) (10 points) If you find a NE (or multiple Nash equilibria), is it (or are they) Pareto efficient?
Duopoly:
1. Consider a duopoly game with 2 firms. The market inverse demand curve is
given by P(Q) = 120-Q, where Q = 9₁ +9₂ and q; is the quantity produced by firm
i. The firm's long run total costs are given by C₁(9₁)=2q₁ and C₂(92)=92,
respectively.
a. Determine the Nash Equilibrium for Cournot competition, in which firms
compete based on quantity. What is each firm's best response as a
function of the other firm's output? Graph these best response functions
in on the same graph. Compute the associated payoffs for each firm.
b. Determine the Nash Equilibrium for Bertrand competition, in which firms
compete based on price and stand ready to meet market demand at that
price. What is each firm's best response as a function of the other firm's
price? Graph these best response functions in on the same graph.
Compute the associated payoffs for each firm.
Game Th
QUESTION 13
Consider a market where two firms (1 and 2) produce differentiated goods and compete in prices. The demand for firm 1 is given by
D₁(P₁, P2) = 140 - 2p1 + P2
and demand for firm 2's product is
D2 (P1, P2)
140 - 2p2 + P1
Both firms have a constant marginal cost of 20.
What is the Nash equilibrium price of firm 1?
(Only give a full number; if necessary, round to the lower integer; no dollar sign.)
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