Consider an industry with two identical firms (denoted firm 1 and 2) producing a homogenous good. Firms compete in quantities and have a constant marginal cost of 30. Demand in the industry is given by D(p) = 195-p/2. Let q1 and q2 denote the quantities of firm 1 and 2, respectively. Derive the best resonse functions and the Nash equilibrium in quantities. Which of the following statements are correct? [There may be more than one correct statement.] The Nash equilibrium quantity for each firm is 40. O The Nash equilibrium quantity for each firm is 60. The reaction function of firm 1 is given by q1 = 60 - (92)/2. The reaction function of firm 1 is given by q1 = 45 - (92)/2. The reaction function of firm 1 is given by q1 = 90 - (92)/2. O The Nash equilibrium quantity for each firm is 30. None of the above.

Consider an industry with two identical firms (denoted firm 1 and 2) producing a homogenous good. Firms compete in quantities and have a constant marginal cost of 30. Demand in the industry is given by D(p) = 195-p/2. Let q1 and q2 denote the quantities of firm 1 and 2, respectively. Derive the best resonse functions and the Nash equilibrium in quantities. Which of the following statements are correct? [There may be more than one correct statement.] The Nash equilibrium quantity for each firm is 40. O The Nash equilibrium quantity for each firm is 60. The reaction function of firm 1 is given by q1 = 60 - (92)/2. The reaction function of firm 1 is given by q1 = 45 - (92)/2. The reaction function of firm 1 is given by q1 = 90 - (92)/2. O The Nash equilibrium quantity for each firm is 30. None of the above.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter12: Price And Output Determination: Oligopoly

Section: Chapter Questions

Problem 2E

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