Problem Set 1 Solution
The demand and cost functions are,
200y + 1.5y 2
a) Revenue as a function of output would be R(y) = 400y y 2 .
The revenue maximizing choice of output must satisfy,
400 2y = 0
Problem Set 2 Solution
1. Nash Equilibrium
a) The best response functions can be seen on the payo matrix.
1 , 1
4 , 4
b) The Nash Equilibria are (C, M ) and (D, R).
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