{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

# DuopolyNash01 - Duopoly Games 1 T F In Cournot equilibrium...

This preview shows pages 1–2. Sign up to view the full content.

Duopoly & Games 1. T F In Cournot equilibrium each firm chooses the quantity that maximizes its own profits assuming that the firm's rival will continue to sell at the same price as before. 2. T F In Bertrand competition between two firms, each firm believes that if it changes its output, the rival firm will change its output by the same amount. 5. T F In the Cournot model, each firm chooses its actions on the assumption that its rivals will react by changing their quantities in such a way as to maximize their own profits. 9. The demand for y is given by y=256/p 2 . Only two firms produce y. They have identical costs c(y)=y 2 . If they agree to collude and maximize their joint profits, how much output will each firm produce? A. 2 B. 5 C. 10 D. 12 E. 16 Correct Answer 1 F 2 F 5 F 9 A set MR=MC and solve. See below no 9. Industry output=Y and each firms output=y. So Y=2y from Y=256/p 2 we get R=pY=256/p and solving for p from Y=256/p 2 , p=(256) 1/2 Y -1/2 so R= (256) 1/2 Y 1/2 = 16Y 1/2 , on taking derivatives, MR= 8 Y -1/2 , remember Y=2y MC=2y=MR=8(2y) -1/2 , So (2y) 3/2 =8 8y 3 =64 y 3 =8 y=2 Nash 1. T F A situation where everyone is playing a dominant strategy must be a Nash

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### Page1 / 3

DuopolyNash01 - Duopoly Games 1 T F In Cournot equilibrium...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online