Find the Nash equilibrium of the game that Bud and Wise play. Bud and Wise are the

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Find the Nash equilibrium of the game that Bud and Wise play.

Bud and Wise are the only two producers of aniseed beer, a New Age product designed to displace root beer. Bud and Wise are trying to figure out how much of this new beer to produce. They know (i) If they both produce 10,000 gallons a day, they will make the maximum attainable joint economic profit of $200,000 a day, or $100,000 a day each.
(ii) If either firm produces 20,000 gallons a day while the other produces 10,000 gallons a day, the one that produces 20,000 gallons will make an economic profit of $150,000 and the other will incur an economic loss of $50,000.
(iii) If both produce 20,000 gallons a day, each firm will make zero economic profit.

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Economics

ISBN: 9781292433639

14th Global Edition

Authors: Michael Parkin

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