This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
Unformatted text preview: barley both sell for $1, and income is $20, calculate demand elasticity for wheat. 6) Suppose the demand for pizza in a small isolated town is p = 10 – Q. There are only two firms, A and B, and each has a cost function TC = 2 + q. Determine the Cournot equilibrium. Determine the equilibrium quantities of each if firm A is the Stackelberg leader. 7) Suppose two firms, A and B, are simultaneously considering entry into a new market. If neither enters, both earn zero. If both enter, they both lose 100. If one firm enters, it gains 50 while the other earns zero. Set up the payoff matrix for this game and determine if any pure Nash equilibria exist. Can you predict the outcome? Figure 2 8) Figure 2 shows the payoff for two firms, A and B, that must each choose to produce either an advanced computer or a basic computer. Determine the dominant strategies for each firm (if any) and the Nash equilibria (if any)....
View
Full Document
 Summer '06
 Watugala
 Supply And Demand, market supply curve, ShortRun Market Supply, cost function TC, Longrun cost curves, identical wheat farmers

Click to edit the document details