prod_diff_ans

prod_diff_ans - Problems on Product Dierentiation 1. Two...

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are (imperfect) substitutes. Suppose demand functions are linear in both prices. An True or False. Explain. elasticity. So the answer is true. True or False. Explain. Answer. False. This is the case only if goods are complements. 3. Two &rms choose simultaneously prices in a market where the goods sold are comple- True or False. Explain. cost? Explain. be perfect substitutes and Bertrand competition will drive price to marginal cost that 5. Consider game 2 played in class. Suppose that consumers are willing to pay a maximum other one. What is true about the equilibrium of this game? Explain your answer. (a) Both charging $12 is an equilibrium. incentive to undercut setting the price just below 8 and getting $16 instead of $12. Answer (b) is correct, since we have seen in class that the lowest price charged is 2 p d = 4 deviate by increasing its price to eight. Finally, (d) is not correct, in equilibrum we 1
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This note was uploaded on 10/15/2008 for the course ECON 171 taught by Professor Hopenhayn during the Spring '07 term at UCLA.

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prod_diff_ans - Problems on Product Dierentiation 1. Two...

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