Font 1 Heading 1 1 Heading 2 1 Heading 3 1 Heading 4 1 Heading 5 1 Heading 6 Paragraph 12 Styles 5. Suppose there are two firms, Boors and Cudweiser, each selling identical-tasting nonalcoholic beer. Consumers of this beer have no brand loyalty so market demand can be expressed as - = >-.001(s + 2c). Boors' marginal revenue function can be written MR - 5-.001(29s +2)and symmetrically for Cudweiser, Boors operates with out-of-date technology and has constant cost of $4 per unit (MU = AG = 4), whereas Cudweiser has constant cost of $2 per unit. Assuming the firms behave as Cournot competitors, in the Nash equilibrium, Cudweiser will produce a. 1.333 b. 2.333 c. 3.333 d. 4,333 ANSWER: C I 6. Consider the same market for nonalcoholic beer as in the previous question. How many units will Boors produce in the Nash equilibrium? a. 1,333 b. 2.333 C. 3.333Style 6 6. Consider the same market for nonalcoholic beer as in the previous question. How many units will Boors produce in the Nash equilibrium? a. 1,333 b. 2,333 C. 3.333 d. 4.333 ANSWER: a 7. Suppose there are two firms. Boors and Cudweiser, each selling nonalcoholic beer. Suppose Boors and Cudweise are not viewed as perfect substitutes but rather demand for Boors is Or - 5000 - 100OPS + 100Pe and demand for Cudweiser is OC -3000 - 1500Pc + 100Pg. For simplicity, assume zero marginal costs. Which is the more preferred beer? a. Boor's b. Cudweiser c. they are equally preferred d. neither are preferred ANSWER: a I 8. Consider the market for nonalcoholic beers from the previous question. Which of the following is the best-response function for Boors from the Bertrand game? 1. Pg- -2.5 + .05Pc b. Pg - 25+ .05PC C PP -25 -.05PR AD F5 F71 Handing & ANSWER: a 8. Consider the market for nonalcoholic beers from the previous question. Which of the following is the best-response function for Boors from the Bertrand game? a. PR- -2.5+.05PC b. Pp - 2.5+.05Pc C. PC- 2.5 - .05PB d. PB = 2.5 - .15PC ANSWER: b 9. Consider the market for nonalcoholic beers from the previous question. Which of the following is the Bertread reaction function for Cudweiser? a. Pc= 1+ .033Pg b. Pc- 1 - .033Pg C. PC- 1.5+.075Ps d. Pp - 1.5 + .075PC I ANSWER: a 10. Consider the market for nonalcoholic beers from the previous question. Boor" price in a Nash equilibrium (assuming Bertrand competition in these differentiated beers) is about a. 1.71 b. 2.55 9* X X A . Z . A . AND AaBb AaBbC AaBbCc] ABIC De ABC Font 1 Heading 1 1 Heading 2 1 Heading 3 1 Heading 4 1 Heading 5 1 Head Paragraph Styles 10. Consider the market for nonalcoholic beers from the previous question. Boors' price in a Nash equilibrium (assuming Bertrand competition in these differentiated beers) is about a. 1.71 b. 2.55 c. 3.55 d. 4.29 ANSWER: b 1 1. Consider the market for nonalcoholic beers from the previous question. Cudweisers' price in a Nash equilibrium (assuming Bertrand competition in these differentiated beers) is about a. 0.99 b. 1.09 C. 1.71 I d. 2.55 ANSWER: b 12. Two firms engage in Bertrand competition in differentiated products, After doing all the appropriate calculations, you find the best-response functions are Pa - 25 +.158- and Pre -15 4.0758. Without doing any further calculations can WParagraph Ing Pc b. Yes, Pc > PB C. Yes. PB - PC d. No; it cannot be determined. ANSWER: a 9
