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60q, where q is total market output supplied by Carl and Molly combined. Each has identical total costs of c(qi)=(1/2)qi2,i={C,M} a. If Carl and Molly
60q, where q is total market output supplied by Carl and Molly combined. Each has identical total costs of c(qi)=(1/2)qi2,i={C,M} a. If Carl and Molly compete as Cournot-competitors, what output will each choose and what will be their profits? qC=qM=C=M= b. If Carl and Molly meet together and decide to collude, assuming they decide each will produce the same level of output, how much output does each produce and how much profit does each earn? qCc=qMc=Cc=Mc= c. Carl and Molly discover it is illegal to collude, and they learn that the penalties, if caught, are so high that they dare not communicate directly any more about colluding. Each must simply decide, independently and without communicating with the other, whether to cooperate tacitly and produce the output they agreed upon in part (b), or to "deviate" and do the very best they can for themselves, given the action of the other. To help him decide what to do, Carl constructs the payoff matrix below. Letting the payoffs be the firms' profits, help him to fill out the matrix. 60q, where q is total market output supplied by Carl and Molly combined. Each has identical total costs of c(qi)=(1/2)qi2,i={C,M} a. If Carl and Molly compete as Cournot-competitors, what output will each choose and what will be their profits? qC=qM=C=M= b. If Carl and Molly meet together and decide to collude, assuming they decide each will produce the same level of output, how much output does each produce and how much profit does each earn? qCc=qMc=Cc=Mc= c. Carl and Molly discover it is illegal to collude, and they learn that the penalties, if caught, are so high that they dare not communicate directly any more about colluding. Each must simply decide, independently and without communicating with the other, whether to cooperate tacitly and produce the output they agreed upon in part (b), or to "deviate" and do the very best they can for themselves, given the action of the other. To help him decide what to do, Carl constructs the payoff matrix below. Letting the payoffs be the firms' profits, help him to fill out the matrix
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