**Practice** =-15 Qand three firms with cost curvesF. Consider a market with inverse demand P(Q)C1(91) = 391, C2(92) = 392 and C3(93) = 393 (that is, they have the same marginal costs andno fixed costs). They compete by choosing quantities.Suppose that Firm 1 chooses quantity first and is able to credibly commit to this choice.Then firm 2 choose its quantity after observing firm 1's quantity, and is able to crediblycommit to this choice. Then firm 3 chooses its quantity after observing firm 1 and firm 2'squantities. In the SPNE of this game, what is the price faced by consumers?(a) P = 4.5(b) P=6.5(c) P = 8.5(d) P = 10.5(e) P = 3.5

Answered: = - 15 Qand three firms with cost…

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.3P

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