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Solve the following questions all the information is provided 1} Market demand is given by Q=100-P. There are only two firms in the market producing

Solve the following questions all the information is provided

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1} Market demand is given by Q=100-P. There are only two firms in the market producing identical products. Cost structure of rm 1 is given by C(q,}=10q,, cost structure of rm 2 is given by C(q2)=2{lq2. I} Find the Coumot-Nash Equilibrium {Firms compete, each choosing its quantity, taking other rm's quantity as given}. How much will each rm produce? What will be the market price? is Would your answer to part a change if i) each firm had sunk xed costs ii) each rm had nonsunk fixed costs? n If firms were engaged in price competition instead (Bertrand Model), what would be the equilibrium price and quantities? 7. (20 pts) For the game below, the Incumbent can either Maintain or Expand, and the Potential Entrant may either Enter or Stay Out. Potential Entrant Enter Stay Out Incumbent Maintain 8. 8 20. 0 Expand -6. -4 10, 0 a. Identify all the Nash equilibria in this game. Show your work. b. Draw the extensive form game where the Incumbent moves first. What is the predicted outcome of this game? Explain clearly how you determine this. c. Draw the extensive form game where the Potential Entrant moves first. What is the predicted outcome of this game? Explain clearly how you determine this. d. Is there a first mover advantage in this game? Explain.6 Firms have two actions available to them. Price high (H) or price low (L). The matrix below gives the corresponding profits. The first number in each box represents Firm 1's profit and the second number is Firm 2's profit. Firm 2 H L Firm 1 H 6.6 3.8 L 8,3 5,5 a) What is the cooperative outcome of this game? b) What is the Nash equilibrium of this game? Assume that the game is static (played only once) If this game is repeated infinitely, what is the likely outcome of this game? Explain. d) How would your answer to part a change if the profit matrix was changed as follows and transfers between firms were possible? Firm 2 H Firm 1 H 6,6 3,10 L 10,3 5,53) Market demand is given by Q=100-P. There are only two firms in the market producing identical products. Cost structure of firm 1 is given by C(q,)=10q,, cost structure of firm 2 is given by C(q2)=20q2. a) Find the Cournot-Nash Equilibrium (Firms compete, each choosing its quantity, taking other firm's quantity as given). How much will each firm produce? What will be the market price? b)Find the Bertrand-Nash Equilibrium (Firms compete, each choosing its price taking other firm's price as given). What will be market price and market quantity

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