Identify all pure strategy nash equilibrium

Assignment Help Business Economics
Reference no: EM13769403

Assume that the demand for chalk is p = 8 -0.1, where P is the market price and Q is the total market output measured in thousands of boxes of chalk. Suppose that there are three firms in this industry, each of which has a constant variable cost of $2. Each firm choose its own output level, qi, and takes whatever price the market determines. To simplify the problem, each firm can choose from three levels of output (in thousands): low ( q1 = 8), medium ( q1 = 10), or high ( q1 = 12), with fixed costs (in thousands) of $2, $4, and $4, for low, medium, and high output, respectively. Assume, for simplicity, that all other firms choose the same output level (as each other), so that low ( q2= 24), medium ( q2= 30), or high ( q2= 36).

a. Construct a payoff table for this game, using profits per firm as the payoffs.

b. Identify all pure strategy Nash equilibrium (if any exist).

 

c. Describe the competitive nature of this industry. How might this change if each of the other firms can independently choose their output level? What is each firm likely to choose? What implication(s) would this have for other firms?

Reference no: EM13769403

Questions Cloud

What is the policy of import substitution : 1. What is the policy of import substitution? Has this policy worked for the developing countries? If not, what are the problems of this policy?2.  Mention any two benefits of export promotion policy
Calculate the NPV and IRR : Peggy's Peaches has developed a new product, the Bruiseless Peach, which always stays peachy fresh. Peggy's paid 85,000 to a marketing firm to survey the bruiseless peach market. The potential sales were estimated at $250,000 per year. New equipment ..
Identify the pure strategy nash equilibrium for the game : Identify which strategies survive iterated elimination of dominated strategies. Identify the pure strategy Nash equilibrium for the game. Construct mixed-strategy Nash equilibrium for the game.
What training methods would you use : Suppose that you are the manager of an account receivable unit in a large company. You are switching to a new system of billing and record keeping and need to train your supervisors and thirty two employee in the new procedures. What training methods..
Identify all pure strategy nash equilibrium : Assume that the demand for chalk is p = 8 -0.1, where P is the market price and Q is the total market output measured in thousands of boxes of chalk. Suppose that there are three firms in this industry, each of which has a constant variable cost of $..
Explain why the school of austrian economics dislike : According to Thomas E. Woods, what factors contributed to the economy recovering from the 1920 Great Depression? Explain why the school of Austrian Economics dislike Interventions, say by the Federal Reserve in the economy to manage business cycles? ..
Values in the payoff table below indicate gain of customers : Two banks (Franklin and Lincoln) compete for customers in the growing city of Logan town. Both banks are considering opening a branch office in one of three new neighbour hoods: Hillsboro, Fremont, or Oakdale. The strategies, assumed to be the same f..
What is the total holding cost for year using this policy : The annual demand for a product has been projected at 2,500 units. This demand is assumed to be constant throughout the year. The ordering cost is $30 per order, and the holding cost is 40 percent of the purchase cost. Currently, the purchase cost is..
How much will your firm total revenues : You are the manager of a firm that receives revenues of $60,000 per year from product X and $80,000 per year from product Y. The own price elasticity of demand for product X is -1.5, and the cross-price elasticity of demand between product Y and X is..

Reviews

Write a Review

 

Business Economics Questions & Answers

  Long -run marginal propensity

Explain why this formulation of consumption may provide a more accurate description of consumption than the simple consumption function that depends only on current income.

  Q1 1 at point e in figure 84b is mp kr greater or less than

q1. 1. at point e in figure 8.4b is mp kr greater or less than mp lw? 2. explain how do you know? 3. use this

  Brad works in the labor market

If Brad works in the labor market, he can earn a wage of $500 per hour, while Angelina can earn $600 per hour. Considering comparative advantage, which of the two should specialize in the labor market? Explain.

  Imagine how managerial decisions may be easier or more

Imagine how managerial decisions may be easier or more difficult if there were no antitrust restrictions in the U.S. Provide an example to support your response.

  Does the new tax raise enough revenue to compensate

How much revenue will the government raise by taxing Beatriz? How does that revenue compare to her economic losses? Does the new tax raise enough revenue to compensate her for her loss?

  Briefly elucidate methods currently being used to encourage

Using the Internet, library and/or other resources, research and briefly elucidate methods currently being used to encourage economic growth for the typical firm in Hong Kong and for the typical firm in Singapore.

  Illustrate what effect do you think this had on the yen

At the prompting of the United States, Japan relaxed the restrictions and allowed the companies to invest anywhere in the world. Illustrate what effect do you think this had on the yen/dollar exchange rate and the trade balance between the two cou..

  Find out the total revenue and total cost

Equivalent to selecting the output where the spread between total revenue and total cost is greatest.

  Eluciate new income in first round of multiplier process

If in an economy a $120 billion increase in consumption spending creates $120 billion of new income in the first round of the multiplier process.

  Gdp per capita ppp current international for sub-saharan

gdp per capita ppp current international for sub-saharan africa and uganda between the years 1980 and 2010.1. for

  What is the minimum salvage value after seven years

A remotely situated fuel cell has an installed cost of $2,200 and will reduce existing surveillance expenses by $360 per year for seven years. The border security agency's MATT is 12% per year. What is the minimum salvage (market) value after seven y..

  Elucidate how long must a quota in effect to have an impact

Elucidate how long must a quota be in effect to have an impact. Using a demand-and-supply diagram, illustrate and explain the net welfare loss from imposing such a quota.

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