Help me please Question 1quantity produced by firms 1,2 and let the inverse demand given by p = 12 - q1- q2 where p =price of the good. Both firms have unit cost 2. Assume each firm can produce only one of thefollowing levels of quantity: 2, 4 or 5.Consider a Cournot duopoly with two firms 1 and 2. Let qı and q2 beTable 1: Profit and best response of firm 192 212| q2 =492=5qi = 2qi=416*15Table 1 presents the profit of firm 1 and its best response to specific q2. The profits at q2 = 2 areshown and best response is identified by *. Filling up the missing values, identify best responseof firm 1 to other values of q2.Table 2: Profit and best response of firm 2q2 = 21292=416*92=515qi = 2qi=4qi = 5Table 2 presents the profit of firm 2 and its best response to specific qı. The profits at q1 = 2 areshown and best response is identified by *. Filling up the missing values, identify best responseof firm 2 to other values of q1.Table 3: Profits and best responses of both firmsq2= 292= 492=5q1= 2q1 = 4q1= 5Using the information from Tables 1,2, present the profits of firms in Table 3 together with bestresponses. For each cell, write the profit of firm 1 in the left box and profit of firm 2 in the rightbox. Then identify all Nash Equilibrium (NE) of this Cournot duopoly.

TABLE 1: - q2=2 q2=4 q2=5 q1=2 12 8* 6* q2=4 16* 8* 4 q1=5 15 5 0 CALCULATION: TR =…

Question 1 quantity produced by firms 1,2 and let the inverse demand given by p = 12 – q1- q2 where p = price of the good. Both firms have unit cost 2. Assume each firm can produce only one of the following levels of quantity: 2, 4 or 5. Consider a Cournot duopoly with two firms 1 and 2. Let qı and q2 be Table 1: Profit and best response of firm 1 q2 = 4 q2 = 2 12 92 = 5 qi= 2 qi = 4 qi = 5 Table 1 presents the profit of firm 1 and its best response to specific q2. The profits at q2 = 2 are shown and best response is identified by . Filling up the missing values, identify best response of firm 1 to other values of q2. 16 15 Table 2: Profit and best response of firm 2 q2= 2 12 92 = 4 16* 92 =5 15 qi = 2 qi=4 qi = 5 Table 2 presents the profit of firm 2 and its best response to specific qı. The profits at qı = 2 are shown and best response is identified by *. Filling up the missing values, identify best response of firm 2 to other values of q1. Table 3: Profits and best responses of both firms q2= 4 92=2 92=5 q1= 2 91=4 q1 = 5 Using the information from Tables 1,2, present the profits of firms in Table 3 together with best responses. For each cell, write the profit of firm 1 in the left box and profit of firm 2 in the right box. Then identify all Nash Equilibrium (NE) of this Cournot duopoly.

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter12: Price And Output Determination: Oligopoly

Section: Chapter Questions

Problem 1E