Find the nash equilibrium and total quantity , Macroeconomics

Assignment Help:

Consider a model of Cournot competition as studied in class, with 2 firms and a linear inverse demand function P(Q) = a - Q (where Q = q1 + q2 is the total quantity produced by the two firms and a is a parameter). The firms have different
marginal costs: c1 for Firm 1 and c2 for Firm 2.
(a) Find the Nash equilibrium.

(b) Assume Firm 1's marginal cost is larger (c1 > c2). Which firm produces more in equilibrium? How do the quantities produced in equilibrium change if Firm 1 improves its technology, leading to a lower c1 (while c2 is unchanged)?

(c) Find the total quantity produced and each firm's profit in equilibrium. Describe what happens to these when Firm 1 changes its technology as above.


Related Discussions:- Find the nash equilibrium and total quantity

Neoclassical theory, Do neoclassical economists view prices and wages as st...

Do neoclassical economists view prices and wages as stickly or flexible

Rapidly rises housing prices, Why did housing prices rise rapidly during 20...

Why did housing prices rise rapidly during 2002-2005? Why did the mortgage default rate increase so sharply during 2006 and 2007 even before the 2008-2009 recession began?

Find the compensating variation , Joe has preferences over pizza (p) and be...

Joe has preferences over pizza (p) and beer (b) given by U = pb. The marginal utilities are MU p = b and MU b = p, and Joe's income is I = 60. 1. Find Joe's optimal consumptio

Overnight interest rates targets and money supply, Q. Overnight interest ra...

Q. Overnight interest rates targets and money supply? There are many ways to explain the significant connection between overnight interest rate target and money supply. We will

Central bank, how can a central bank diminish inflation

how can a central bank diminish inflation

Live around a hazardous waste dump, : Suppose that 100 people live around a...

: Suppose that 100 people live around a hazardous waste dump. If the people continue to live there for 20 years, one of them will likely contract a painful, non-fatal cancer that w

Compare and contrast federal government expenditures, Compare and contrast ...

Compare and contrast federal government expenditures, state and local government expenditures, and financing government expenditures. Suggest a total of three actions that should b

Help, Examine the graph below. The mayor has placed a $2 tax on the sale of...

Examine the graph below. The mayor has placed a $2 tax on the sale of each taco sold within the city. How large is the decrease in producer surplus?

Firm‘s lowest average cost, If the firm‘s lowest average cost is $52 and th...

If the firm‘s lowest average cost is $52 and the corresponding average variable cost is $26, what does it pay a perfectly competitive firm to do if • The market price is $51?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd