Chapters%2011%20%26%2012%20Practice

Chapters%2011%20%26%2012%20Practice - produce and what...

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* For more practice, do the Practice Final Exam! * 1. Two identical firms face a market demand curve of: P = 200 – 2Q. Their marginal cost of production is a constant $24. Assume that firms can produce partial units. a. Suppose the two firms form a successful cartel. How much will the firms produce, and what price will they charge? b. Suppose the firms behave as in the Cournot model of oligopoly. How much will the firms produce, and what price will they charge? c. Suppose the firms behave as in the Bertrand model of oligopoly. How much will the firms
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Unformatted text preview: produce, and what price will they charge? 1 2. There are 2 firms in an industry. Firm A has two possible options: left or right. Firm B has two possible options: top or bottom. The payoff matrix is given below. Firm A Left Right Firm B Top A’s profit: $500 B’s profit: $1,000 A’s profit: $600 B’s profit: $600 Bottom A’s profit: $300 B’s profit: $800 A’s profit: $400 B’s profit: $700 a. What is Firm A’s dominant strategy? What is Firm B’s dominant strategy? b. Is there a Nash equilibrium of this game? If so, what is it? 2...
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Chapters%2011%20%26%2012%20Practice - produce and what...

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