Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Business Economics Expert

problem: Consider two firms producing an identical product in a market where the demand is described by p = 1; 200 - 2Y . The corresponding cost functions are c1(y1) = y21 and c2(y2) = 3y22.

(a) State the profit maximization problem of firm 1 and use the first order condition to derive firm 1's reaction function.

(b) State the profit maximization problem of firm 2 and use the first order condition to derive firm 2's reaction function.

(c) Solve the system of reaction functions to identify how much each firm is producing, what is the market quantity, the market price, and the corresponding individual and collective profits.

(d) Assuming that the firms can coordinate their actions, what are the individual quantities produced, the market quantity, the market price, and the resulting joint profits?

(e) How will the firms distribute the joint profits (Hint: Find the minimum amount that each firm is willing to accept and the maximum amount available for each firm under the cartel agreement ). Is this form of cooperation sustainable? describe.

problem: Two firms, producing an identical good, engage in price competition. The cost functions are c1 (y1) = 1:17y1 and c2 (y2) = 1:19y2, correspondingly. The demand function is D(p) = 800 - 50p. The firm that charges the lowest price gets the entire demand, while, if prices are equal, each firm gets exactly one half of the total demand. Firms can only charge prices that correspond to denominations of Canadian dollars (i.e., prices change by one cent).

(a) Suggest an equilibrium pricing scenario (i.e., one price per firm). Given the prices you propose, find the quantities that each firm is selling, the total market quantity, and the corresponding profits. Justify why the prices you propose are equilibrium prices (by showing that NO firm wants to deviate from the prices you propose).

(b) Repeat part (a) assuming that the Canadian economy run out of 1 cent and 5 cent coins (i.e., prices can change only in multiples of twenty-five cents).

problem: Consider a two-player game where player A chooses "Up," or "Down" and player B chooses "Left," "Center," or "Right". Their payo§s are as follows: When player A chooses "Up" and player B chooses "Left" player A gets $5 while player B gets $2. When player A chooses 1"Up" and player B chooses "Center" they get $6 and $1 correspondingly, while when player A chooses "Up" and player B chooses "Right" player A gets $7 while player B gets $3. Moreover, when player A chooses "Down" and player B chooses "Left" they get $6 and $2, while when player A chooses "Down" and player B chooses "Center" they both get $1. Finally, when player A chooses "Down" and player B chooses "Right" player A loses $1 and player B gets $1. Assume that the players decide simultaneously (or, in general, when one makes his decision doesnít know what the other player has chosen).

(a) Draw the strategic form game.

(b) Is there any dominant strategy for any of the players? Justify your answer.

(c) Is there any Nash equilibrium in pure strategies? Justify your answer fully and discuss your result.

When an action is never chosen by a player it is because this action is DOMINATED by another action (or by a combination of other actions). Dominated strategies are assigned a probability of 0 in any Nash Equilibrium in mixed strategies. Given this observation answer the following parts of this problem:

(d) Find the best response functions and the mixed strategies Nash Equilibrium if each player randomizes over his actions.

(e) Show graphically the best responses and the Nash Equilibria (in pure and in mixed strategies).

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M9248

Have any Question? 


Related Questions in Business Economics

How are prospective payments using drgs intended to change

How are prospective payments using DRGs intended to change the incentive structure for hospitals

A decision maker has ordered every commodity in walmart

A decision maker has ordered every commodity in Walmart alphabetically according to the commodity's name. Every time when he needs to choose from several commodities, he always choose the second one according to his orde ...

Imagine youve started a new pizza restaurant it costs you

Imagine you've started a new pizza restaurant. It costs you about $6 to produce a pizza. Last week you sold 500 pizzas for $12 each. This week you raised your price and sold 375 pizzas for $14 each. What price should you ...

How does the learning environment effect the success of

How does the learning environment effect the success of students? Provide examples.

Qxd 14 - 12 px andnbspqxs 14pxnbsp- 1anbspdetermine the

QXd = 14 - (1/2) P X and QXS = (1/4)P X  - 1 a. Determine the equilibrium price and quantity. Show the equilibrium graphically. b. Suppose a $12 excise tax is imposed on the good. Determine the new equilibrium price and ...

1 how can you implement a queue data structure using a

1. How can you implement a queue data structure using a doubly linked list? Do you think it is necessary to use a doubly linked list rather than a singly linked list or not? 2. If we need a add and delete function that c ...

Given two eventsnbspgnbspandnbsph the probabilities of

Given two events  G  and  H , the probabilities of each occurring are as follows: P( G ) = 0.22; P( H ) = 0.34; P( H  AND  G ) = 0.09. Using this information:  Find the complement of P ( H  AND  G ).  Round to 2 places.

You run a small pizza shop named pizza hat initially you

You run a small pizza shop named Pizza Hat. Initially you sold pizzas for $8 and every week you sold around 3000 pizzas. Each pizza costs you $3 to make. One day you decided to over discounts to customers to see if you c ...

1 the following table shows the prices and quantity

1. The following table shows the prices and quantity demanded of Alberta wheat in 2014 and 2015. The change in 2012 resulted from exceptional weather, resulting in a bumper crop. 2014 2015 Bushels demanded 1.74 billion 1 ...

Discuss three ranges of the aggregate supply curve explain

Discuss three ranges of the aggregate supply curve. Explain changes in the AD-AS macroeconomic equilibrium due to the aggregate demand shifts and due to aggregate supply shifts. Apply the AD-AS model to the two types of ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As