6 QUESTION 7Suppose two risk-neutral firms, 1 and 2, are engaged in a one-shot Cournot market. Market demand (with Prepresenting market price and Q representing total market output) is given by P(Q) = 70 - Q where Q = 91 + 92Firm 1 knows that its own costs are "medium", so C1(91) = 2591, and that Firm 2's costs may be either "low", soC2(42) = 2092 (with 20% probability), or "high", so C2(q2) = 3092 (with 80% probability).Firm 2 knows its own costs, and Firm 1's costs.In the Bayesian Nash equilibrium for this market, what will be the total market output Q if Firm 2's true costsare "low"?

Demand Function : P = 70 - Q where , Q = q1 + q2 P = 70 - q1 - q2 Firm 1 Costs = 25q1 Firm 2…

pse two risk-neutral firms, 1 and 2, are engaged in a one-shot Cournot market. Market dema senting market price and Q representing total market output) is given by P(Q) = 70 -Q where Q= knows that its own costs are "medium", so C1(q1) = 2591, and that Firm 2's costs may be eith D= 2002 (with 20% probability), or "high", so C2(92) = 30q2 (with 80% probability). knows its own costs, and Firm 1's costs. Bayesian Nash equilibrium for this market, what will be the total market output Qif Firm 2's

pse two risk-neutral firms, 1 and 2, are engaged in a one-shot Cournot market. Market dema senting market price and Q representing total market output) is given by P(Q) = 70 -Q where Q= knows that its own costs are "medium", so C1(q1) = 2591, and that Firm 2's costs may be eith D= 2002 (with 20% probability), or "high", so C2(92) = 30q2 (with 80% probability). knows its own costs, and Firm 1's costs. Bayesian Nash equilibrium for this market, what will be the total market output Qif Firm 2's

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.4P

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