Assume the demand curve facing an industry can be represented P = 100 – Q. Suppose that two firms collude in an infinitely repeated game, where each firm has marginal costs of 20 per unit. If firm 1 deviates on the collusive agreement, how much additional profit do they make in the period of deviation versus the profit they were making under collusion?

QUESTION 13 Consider a market where two firms (1 and 2) produce differentiated goods and compete in prices. The demand for firm 1 is given by D₁(P₁, P2) = 140 - 2p1 + P2 and demand for firm 2's product is D2 (P1, P2) 140 - 2p2 + P1 Both firms have a constant marginal cost of 20. What is the Nash equilibrium price of firm 1? (Only give a full number; if necessary, round to the lower integer; no dollar sign.)

Two firms are engaged in duopoly competition in a market with demand Q = 120 - p and zero costs.   The reaction function for firm i given firm j's output q i = 60 - 1 2 q j .   What is the payoff to firm i if the two firms engaged in collusion to maintain monopoly output and prices. Assume that each firm gets half the monopoly profit.

Suppose two firms face market demand of P=150-Q, where Q = q1+ q2. Both firms have the same unit cost of C, which C=28. Assume the firms compete a la Stackelberg. Firm 1 is the leader and Firm 2 is the follower in this market. a) What is the follower's total revenue function? b) Determine the equilibrium output level for both the leader and the follower. c) Determine the equilibrium market price. d) Determine the profits of the leader and the follower.

Suppose two firms compete in quantities (Cournot) in a market in which demand is described by: P=260-2Q. each firm incurs no fixed cost but has a marginal cost of 20. Now imagine they collude to produce the monopoly output.   Suppose that after the cartel is established, firm 1 decides to cheat on the collusion, assuming the other firm will continue to produce its half of the monopoly output.   What will be firm 1's profit if firm 2 continues producing the monopoly outcome? a. 4500 b. 5200 c.4200 d. 4050 Should firm 2 respond and increas their quantity? Yes or No

In the initial Cournot oligopoly equilibrium, both firms have constant marginal costs, m, and nofixed costs, and there is a barrier to entry. Determine what happens to the best-response functionof firms if both firms now face a fixed cost of F

Consider a strategic interaction between firms 1 and 2. In Stage 1, firm 1 chooses the level of advertising a > 0. In stage 2, firm 2 learns about firm 1's amount of advertising a. Subsequently, firms 1 and 2 compete in a Cournot fashion. That is, firms 1 and 2 simultaneously and independently choose their outputs: q1 and q2, where qi denotes the output of firm i = 1,2. The price that the consumers are willing to pay for the product produced by the two firms, or the inverse aggregate demand function, is given by 6a - q1 - q2. Firm 1's advertising cost is a3. Both firms have zero production costs. Both firms maximize their individual profits (equal to the total revenue minus total cost). In the unique subgame perfect equilibrium of the game, the two firms will choose the following strategies: a. Firm 1 will choose strategy (a = 3, q1 = a/3) while firm 2 will choose strategy q2 = a/3 b. Firm 1 will choose strategy (a = 1, q1 = 16/3 ) while firm 2 will choose strategy q2 = 16/3 c. Firm 1…