Q= 20 D. The gam e does not have a Nash Consider a noncollusive duopoly model wi
ID: 1122213 • Letter: Q
Question
Q= 20 D. The gam e does not have a Nash Consider a noncollusive duopoly model with both firms supplying ketchup. The marginal cost for each firm is $1.00. The market demand is shown by the figure on the right. 8. Let us assume that the two fims supplying ketchup are Firm A and Firm B. The price charged by Firm A is denoted as PA and the price charged by Fim B is denoted as Pe If the firms collude, then firm A will charge a price of: and Firm B will charge a price of: PB Demand (Enter your responses rounded to two decimal places.) 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 Quantity (in thousands)Explanation / Answer
Using the figure we can find the market demand . Which is P = 4-Q.
Under collusion firms charge monopoly price and each firm produces half the quantity. So under monopoly Equilibrium is MR =MC .
TR = (4-Q)Q . MR = dTR/dQ = 4-2Q.
At equilibrium 4-2Q = 1 . Q = 1.5.
Price = $2.5
PA = $2.50
PB = $2.50
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.