2013-1 Midterm

For parts a to c each firm has total cost function a

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Unformatted text preview: market with linear demand Q=42-2P. For parts a to c, each firm has total cost function . a) [16] Suppose the firms simultaneously choose quantity and play a Nash equilibrium. Find each firm’s quantity, the market price, and the deadweight loss. b) [8] Suppose firm 1 first chooses , and then firm 2 chooses after observing . Find the subgame-perfect equilibrium (SPE). [Note: Some fractions might get a little ugly...] c) [8] Suppose firm 1 first chooses market price P, and then firm 2 chooses after observing P. Firm 1 meets any demand a...
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This test prep was uploaded on 03/17/2014 for the course ECON 302 taught by Professor Shihenlu during the Fall '13 term at Simon Fraser.

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