A monopolist faces a market demand curve given by Q= 70 - P.

Find the marginal revenue function, MR.

If the monopolist can produce at constant average and marginal costs of AC=MC=6.

i. ii. iii.

i. ii. iii.

What output level will the monopolist choose in order to maximize profits? What is the price at this output level?

What are the monopolist's profits?

What output level will the monopolist choose in order to maximize profits? What is the price at this output level?

c. Assume instead that the monopolist has a cost structure where total costs are described by TC= 0.25Q2- 5Q + 300. With the monopolist facing the same market demand and marginal revenue,

What are the monopolist's profits?

Question 2. Chapter 5. Game Theory

Consider the following game in Normal form:

If the game is played simultaneously by both players, find the Nash equilibrium or equilibria.

If the game is played sequentially, solve this game by backward induction. Assume Player A

goes first:

Find the subgame-perfect equilibria.

Which one is the Nash equilibrium?

c. If the game is played sequentially, solve this game by backward induction. Assume Player B goes first:

Find the subgame-perfect equilibria.

Which one is the Nash equilibrium?