What is the nash equilibrium and marginal cost

Assignment Help Business Economics

Reference no: EM131388318

There are two firms (firm A and firm B). Both have marginal cost = 1. Demand is Q = 11 – P. The firms simultaneously set price. If they set the same price they split the market (Bertrand game). Derive the monopolist’s profit maximizing price and denote it P^M. Is both firms charging the price P^M a Nash Equilibrium? Show why or why not. If P^M is not the Nash Equilibrium, what is the Nash Equilibrium? Show why. If firm B had marginal cost = 6, what is the equilibrium?

Reference no: EM131388318

Questions Cloud

Capital structure weights on book value basis : What are Gustav Corporation's capital structure weights on book value basis? What are Gustav's capital structure weights on a market value basis? Which are more relevant, the book or market value weights? Why?

Discuss the history of crises in the financial system : Discuss the history of crises in the financial system since 1980. This suggests there are strong negative externalities that require the financial system to be regulated differently than other type of businesses.

Determine the grashof condition : For the rows assigned, draw the linkage to scale and graphically find all possible solutions (both open and crossed) for angles θ3 and θ4. Determine the Grashof condition.

Sales and earnings for the pharmaceutical industry : 1. Considering the world economic outlook for the coming year and estimates of sales and earnings for the pharmaceutical industry, you expect the rate of return for Lauren Labs common stock to range between -20 percent and +40 percent with the fol..

What is the nash equilibrium and marginal cost : There are two firms (firm A and firm B). Both have marginal cost = 1. Demand is Q = 11 – P. The firms simultaneously set price. If they set the same price they split the market (Bertrand game). If P^M is not the Nash Equilibrium, what is the Nash Equ..

Is montgomery ward liable under a warranty : Ward claimed that there was no way to detect the disease in the one-day-old chicks, nor was there medication available to prevent this disease from occurring. Is Montgomery Ward liable under a warranty and/or strict liability cause of action? Expl..

Compute the abnormal rates of return : Compute the abnormal rates of return for the five stocks in Problem 1 assuming the following systematic risk measure (betas):

Briefly introduce your chosen example of flawed creative : Identify an instance in which an individual or group was unsuccessful in using creative thinking to solve a problem, such as the passage of prohibition in the United States in an attempt to reduce crime and improve living conditions for the workin..

Provide decision in given situation : Heckman, an employee of Clark Equipment Company, severely injured his left hand when he caught it in a power press that he was operating at work. Decision?

User Account

All Pages