Is this simultaneous output decision a prisoners dilemma

Reference no: EM13200900

Two rival distillers, Sluggo (S) and Wormy (W), sell tequila in Hammond. The market demand for the two brands is:

QM = 295 - 2.5P

Average and Marginal production costs are constant: ATCS = MCS = 6 and ATCW = MCW = 14
The two firms must make a simultaneous output decision.

a) On the graph, draw the best response curves for Wormy (BRW) and for Sluggo (BRS). Be sure and label all significant points. (show your work below)

b) What will be the resulting price charged? How many bottles of tequila will each firm sell?

c) Suppose the firms colluded to fix output at QS = 90 and QW = 70. Fill in the missing price and profit information in the payoff table below, where the other output choice is the output for each firm that you determined above. Is this simultaneous output decision between the two firm a prisoners' dilemma? Why or why not?

Reference no: EM13200900

Questions Cloud

Find the market equilibrium price : The government has to go into the market and buy output, which it then puts in a warehouse for indefinite storage. the government must buy units of output to reach its price target the price support program raises profit per firm to.

Why have the experiences of the two age groups differed : Poverty among the elderly fell dramatically between 1959 and 1974 and has continued to decline. However, poverty among that portion of the US population that is less than 18 years old is no lower today than in the 1970s.

What government assistance programs does the census bureau : How does the US Department of Agriculture calculate the official poverty level What government assistance programs does the Census Bureau consider when calculating household income What programs are ignored

Prepare a balance sheet for alaskan : Suppose the firm in Problem A had 40,000 shares of common stock outstanding. What are the earnings per share, or EPS, figure? What are the dividends per share figure?

Is this simultaneous output decision a prisoners dilemma : Suppose the firms colluded to fix output at QS = 90 and QW = 70. Fill in the missing price and profit information in the payoff table below, where the other output choice is the output for each firm that you determined above.

How many truck loads will be required to remove the dirt : A rectangular trench is to be dug which is to be 180 ft long, 90 ft wide and 8 ft deep. A large dump truck can carry 20 cubic yards in a load. How many truck loads will be required to remove the dirt from this trench?

How many medical test kits were sold last year : This year, 230 million test kits are expected to be sold. this represents a 122% increase from the number of kits that were sold last year. How many medical test kits were sold last year?

How quickly is revenue changing : The price function for selling Squinks is p = 180 - 7x. Sales are 38 per day and dropping at 5 per day. How quickly is revenue changing?

What will happen in the industry in the long run : Explain why this firm would not try to sell more output by undercutting the market price. A calculation is not necessary but you may choose to use it as your explanation. What will happen in this industry in the long run

User Account

All Pages