Consider the Cournot game in problem 6. In the Nash equilibrium, what is firm A\
ID: 1201265 • Letter: C
Question
Consider the Cournot game in problem 6. In the Nash equilibrium, what is firm A's profit? (a.) 45,656 (b.) 38,416 (C.) 36,040 (d.) 32,101 8. Firm A and B are Bertrand competitors, and each has a total cost function 25x_i, where x_i is firm i's output. Demand for x is x = 400 - P, where P is the price of x. In the equilibrium, firm A charges a price of and firm B charges a price of. (a.) $40; $20 (b.) $20; $20 (c.) $25; $25 (d.) $20; $25 9. Consider the Bertrand game described in question 8. Exactly how much x will trade in the market when the two firms are both charging the optimal price? (a.) 380 (b.) 155 (c.) 125 (d.) 375 10. In the Bertrand game in question 8, when the two firms charge their optimal profit, what is A's profit amount? (a.) $0 (b.) $12 (C.) $44 (d.) $54Explanation / Answer
Q7. Data relating to the Cornot modelis not available in the Question.
Q8. As per Bertrand (Price) Competition theroy, Analysis is based on the type of the products such as either homogeneous Products or Differentiated products.
In the given case A &B are bertrand Competitors,
Total cost function of the firm= 25X
Demand for the x is X=400- P, where p is the price of X
What is the equilibrium, or best strategy of each firm? The answer is that both firms will set the same prices, p1 = p2 = p, and that it will be equal to the marginal cost, in other words, the perfectly competitive outcome.
So at equilibirum level Price of firmA = Price of Firm B = 25
Option (C)
Q9. Equilibrim Output at price 25 is
Since X = 400-P= 400-25 = 375
Option (D)'
Q10. When two firms are operting at equilibirum level with equal marginal cost, then the optimal profit (Total Revenue- Total cost ) is equal to "0"
Total Revenue = P * Q = 25 * (400-25) = 9375
Total Cost = 25* 375 = 9375
Profit = TR-TC =9375-9375= 0
Option (A)
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.