F19360HW12sol.docx - Solutions for Homework 12 Economics 360 Fall 2019 Chapter 9 Problem 1 There are two Nash equilibria in this game both players

F19360HW12sol.docx - Solutions for Homework 12 Economics...

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Solutions for Homework 12 Economics 360 Fall 2019 Chapter 9: Problem 1: There are two Nash equilibria in this game, both players choosing small and both choosing large. The concept of Pareto Optimality asks if one of these two equilibrium outcomes is better for all players than the other. (Small, Small) is Pareto optimal. Problem 6: a) Q 1 = Q 2 = 60 and P = 160. Each firm makes profit = 7200.
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Unformatted text preview: b ) Monopoly output is 90. 45 is not a Nash equilibrium because if firm 1 chooses 45, firm 2’s best response is to produce more than 45, Q 2 = 67. 1. a 2. d 3. d 4. 80, 120. 5. 140, 60. 6. 20. 7. 40. 8. 45. 9. 30. 10. 40, 40. 11. 40, 40. 12. a 13. a 14. a 15. e 16. d 17. d 18. c 19. a 20. b 21. a 22. b 23. e 24. d 25. d 26. d 27. a...
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