Two firms produce and sell differentiated products that are substitutes for each other. Their demand curves are Firm 1: Q, = 40 - 3P,+ P2 Firm 2: Q, = 40 - 3P2+ P, Both firms have constant marginal costs of $3.10 per unit. Both firms set their own price and take their competitor's price as fixed. Use the Nash equilibrium concept to determine the equilibrium set of prices. Since the firms are identical, they will set the same prices and produce the same quantities. In equilibrium, each firm will charge a price of $ and produce units of output. (Enter your responses rounded to two decimal places.)
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- Two firms produce and sell differentiated products that are substitutes for each other. Their demand curves are Firm 1: Q₁ = 40-3P₁+ P2 1 Firm 2: Q₂ = 40 -3P 2+P1 Both firms have constant marginal costs of $4.70 per unit. Both firms set their own price and take their competitor's price as fixed. Use the Nash equilibrium concept to determine the equilibrium set of prices. Since the firms are identical, they will set the same prices and produce the same quantities. In equilibrium, each firm will charge a price of $ and produce units of output. (Enter your responses rounded to two decimal places.) Each firm will earn a profit of $ (Enter your response rounded to two decimal places.)Two firms operating in the same market must decide between charging a high price or a low price. The Payoffs are as below. Firm A's profit is listed before the comma, B's profit after the comma. Firm B Firm A Low Price High Price Low Price 16, 17 7, 28 High Price 28, 7 22, 22 If each firm tries to choose a price that is optimal, regardless of the other firm's price, what is the Nash equilibrium? Does either firm have a dominant strategy?Jane and Sara are competing orange juice salespersons in Amherst. Their stands are next to each other on a street and consumers regard them as identical. The marginal cost of an orange juice is $1. The demand for orange juice every hour is Q = 20 − P where P is the lowest price between the two salespersons. If their prices are equal they split demand equally. a. If they set prices simultaneously (prices can be any real number), what is the Nash equilibrium price? b. If, against what we have assumed in class, orange juice salespersons have to charge prices in whole dollars ($1, $2, $3, etc), what are the Nash equilibrium prices? c. Assuming whole dollar pricing, if Jane sets her price before Sara, what price would she charge? Answer all 3 parts
- QUESTION 10 Suppose there are two firms that produce an identical product. The demand curve for the product is given by P = 62 - Q where Q is the total quantity produced by the two firms. Both firms choose their individual quantities qı20 and q22 0 simultaneously. Each firm has a marginal cost of 37. What is the market price when both firms produce the quantities in the unique Nash equilibrium? Give your answer as a number to two decimal places.Consider a market for crude oil production. There are two firms in the market. The marginal cost of firm 1 is 20, while that of firm 2 is 20. The marginal cost is assumed to be constant. The inverse demand for crude oil is P(Q)=200-Q, where Q is the total production in the market. These two firms are engaging in Cournot competition. Find the production quantity of firm 1 in Nash equilibrium. If necessary, round off two decimal places and answer up to one decimal place.Consider two firms that produce the same good and competesetting quantities. The firms face a linear demand curve given by P(Q) =1 − Q, where the Q is the total quantity offered by the firms. The costfunction for each of the firms is c(qi) = cqi, where 0 < c < 1 and qiis the quantity offered by the firm i = 1, 2. Find the Nash equilibriumoutput choices of the firms, as well as the total output and the price, andcalculate the output and the welfare loss compared to the competitiveoutcome. How would the answer change if the firms compete settingprices? What can we conclude about the relationship between competitionand the number of firms?
- Two countries produce oil. The per unit production cost of Country 1 is C1 = $2 and of country 2 it is C2 = $4. The total demand for oil is Q = 40-p where p is the market price of a unit of oil. Each country can only produce either 5 units, 10 units or 15 units. The total production of the two countries in a Nash equilibrium is 10 15 20 25 30Consider two firms with a homogeneous product who face the market demand function p = 2 – q1 – 92, where q; and p are the quantities and price. Their constant marginal costs are given by c= 1. The firms compete in quantities in a simultaneous move game. Use this specific example (not a general case) to show that the Nash equilibrium is not Pareto efficient, and the cooperative solution is not an equilibrium (in the sense that both firms have an incentive to cheat). In your answer, use the fact that the firms are identical. Namely, they produce equal amounts (both in the simultaneous move game and in the cooperative case).Question 1: Suppose Southwest (S) and JetBlue (J) choose a number of flights, qs and qj respectively, from Chicago to New York. They both have the same constant marginal cost of 12. For Q = qs + qj, the market demand function for flights is p = 60 – 2Q (1) Suppose the airlines choose quantity simultaneously. Find the Cournot Nash Equilibrium quantities. (2) Suppose the airlines choose price simultaneously. Find the Bertrand Nash Equilibrium. (3) Suppose Southwest and JetBlue collude in the quantities they choose to obtain monopoly profits. Assuming they split the market evenly, what quantity does each firm choose? (4) Suppose Southwest and JetBlue agree in principle to the collusion in Part (4), but Southwest decides to cheat. What quantity will Southwest choose?
- 1. The market (inverse) demand function for a homogeneous good is P(Q) = 10 - Q. There are two firms: firm 1 has a constant marginal cost of 2 for producing each unit of the good, and firm 2 has a constant marginal cost of 1. The two firms compete by setting their quantities of production, and the price of the good is determined by the market demand function given the total quantity. a. Calculate the Nash equilibrium in this game and the corresponding market price when firms simultaneously choose quantities. b. Now suppose firml moves earlier than firm 2 and firm 2 observes firm 1 quantity choice before choosing its quantity find optimal choices of firm 1 and firm 2.Using a payoff matrix to determine the equilibrium outcome Suppose there are only two firms that sell smart phones, Flashfone and Pictech. The following payoff matrix shows the profit (in millions of dollars) each company will earn, depending on whether it sets a high or low price for its phones. Pictech Pricing High Low Flashfone Pricing High 11, 11 2, 18 Low 18, 2 10, 10 For example, the lower, left cell shows that if Flashfone prices low and Pictech prices high, Flashfone will earn a profit of $18 million and Pictech will earn a profit of $2 million. Assume this is a simultaneous game and that Flashfone and Pictech are both profit-maximizing firms. If Flashfone prices high, Pictech will make more profit if it chooses a ______ price, and if Flashfone prices low, Pictech will make more profit if it chooses a _____ price. If Pictech prices high, Flashfone will make more profit if it chooses a _____ price, and if Pictech prices low, Flashfone will make more…Consider that Firm 1 and Firm 2 are involved in price competition. The demand for each firm is given as follows, where Xj denotes the demand for firm i=1,2 and Pi denotes the price that firm i=1,2 chooses. X1=465-3P1+P2 X2=465-3P2+P1 For each firm, it costs 5 to produce a product. At the Nash equilibrium, the price of Firm 1 is Blank 1. Calculate the answer by read surrounding text. , and the price of Firm 2 is Blank 2. Please answer Blank 1 and Blank2.