I need help with this question 1) Cournot Model with Asymmetric Information- Suppose the inverse demand function is P(Q) = 30 – 0.2 × (Qjoe + Qsarah)- Joe has a constant marginal cost of $10, known to both- Joe's expectation about Sarah's constant marginal cost is:12 with probability 0.68 with probability 0.4C2={Question 1(a): Solve for the above Cournot-Nash equilibrium with asymmetricinformation with Sarah as a high cost supplier (C2 = 12 ... unknown to Joe)Question 1(b): Solve for the above Cournot-Nash equilibrium with asymmetricinformation with Sarah as a low cost supplier (C2 = 8 ... unknown to Joe)Question 1(c): Solve for the above Cournot-Nash equilibrium with completeinformation with Sarah as a high cost supplier (C2 = 12 ... known to Joe)Question 1(d): Solve for the above Cournot-Nash equilibrium with completeinformation with Sarah as a low cost supplier (C2 = 8) ... known to Joe)Question 1(e): If Sarah is a low cost supplier, what is the maximum she wouldbe willing to spend to convince Joe of her cost ?

Answered: 1) Cournot Model with Asymmetric…

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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I need help with this question

1) Cournot Model with Asymmetric Information
- Suppose the inverse demand function is P(Q) = 30 – 0.2 × (Qjoe + Qsarah)
- Joe has a constant marginal cost of $10, known to both
- Joe's expectation about Sarah's constant marginal cost is:
12 with probability 0.6
8 with probability 0.4
C2={
Question 1(a): Solve for the above Cournot-Nash equilibrium with asymmetric
information with Sarah as a high cost supplier (C2 = 12 ... unknown to Joe)
Question 1(b): Solve for the above Cournot-Nash equilibrium with asymmetric
information with Sarah as a low cost supplier (C2 = 8 ... unknown to Joe)
Question 1(c): Solve for the above Cournot-Nash equilibrium with complete
information with Sarah as a high cost supplier (C2 = 12 ... known to Joe)
Question 1(d): Solve for the above Cournot-Nash equilibrium with complete
information with Sarah as a low cost supplier (C2 = 8) ... known to Joe)
Question 1(e): If Sarah is a low cost supplier, what is the maximum she would
be willing to spend to convince Joe of her cost ?

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Nash Equilibrium shows a work profile for all players in a game and is utilized to predict the outcome of their decision-making interaction. It models a steady state (i.e., a combination of strategies of total players) in which no player can profit by unilaterally changing its strategy.

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