this question is one question with several parts 9. Duopoly quantity game. Seagate and Western Digital (WD) run a cartel producing identical 1 TB harddrives. The demand for hard drives is Q = 17 – P. They both have MC = 2 and no fixed cost so ATC = 2.It is verified that together the firms maximize their (combined) profit by each making 3.75 hard drives.What profit does Seagate make with this cartel agreement? $_(continued) Is the cartel agreement a Nash equilibrium?а. yesb. no, Seagate wants to decrease productionc. no, Seagate wants to increase productiond. no, Seagate does not want to change production(continued) Suppose that the cartel falls apart after the CEO of Seagate and the CFO of Western Digitalget into a fight over whose homemade BBQ sauce tastes better. The companies are now very angry ateach other and cannot cooperate.Western Digital ends up producing 5 hard drives. What is Seagate's best response?(The answer is a whole number between 4 and 8, inclusive, so calculate Seagate's profit for each option.a table and/or spreadsheet can be used to organize work.)hard drives.

Answers (Ans-9) Let, Seagate = Firm 1 Western digital = Firm 2 Q = 17 – P MC = 2 = ATC Q…

s. The demand for hard drives is Q = 17 – P. They both have MC = 2 and no fixed cost so AT erified that together the firms maximize their (combined) profit by each making 3.75 hard profit does Seagate make with this cartel agreement? $ inued) Is the cartel agreement a Nash equilibrium? , Seagate wants to decrease production

s. The demand for hard drives is Q = 17 – P. They both have MC = 2 and no fixed cost so AT erified that together the firms maximize their (combined) profit by each making 3.75 hard profit does Seagate make with this cartel agreement? $ inued) Is the cartel agreement a Nash equilibrium? , Seagate wants to decrease production

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter13: best-practice Tactics: Game Theory

Section: Chapter Questions

Problem 3E

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Mays and McCovey are beer-brewing companies that operate in a duopoly (two-firm oligopoly). The daily marginal cost (MC) of producing a can of beer is constant and equals $0.40 per can. Assume that neither firm had any startup costs, so marginal cost equals average total cost (ATC) for each firm. Suppose that Mays and McCovey form a cartel, and the firms divide the output evenly. (Note: This is only for convenience; nothing in this model requires that the two companies must equally share the output.) When they act as a profit-maximizing cartel, each company will produce 20 cans and charge $----- per can. Given this information, each firm earns a daily profit of $------ so the daily total industry profit in the beer market is $------------ . Oligopolists often behave noncooperatively and act in their own self-interest even though this decreases total profit in the market. Again, assume the two companies form a cartel and decide to work together. Both firms initially agree to produce…
Mays and McCovey are beer-brewing companies that operate in a duopoly (two-firm oligopoly). The daily marginal cost (MC) of producing a can of beer is constant and equals $0.60 per can. Assume that neither firm had any startup costs, so marginal cost equals average total cost (ATC) for each firm. Suppose that Mays and McCovey form a cartel, and the firms divide the output evenly. (Note: This is only for convenience; nothing in this model requires that the two companies must equally share the output.) Place the black point (plus symbol) on the following graph to indicate the profit-maximizing price and combined quantity of output if Mays and McCovey choose to work together. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
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Discuss THREE (3) organizational problems must a Cartel overcome so that its establishment meets the objectives.
8. Collusive outcome versus Nash equilibrium Consider a remote town in which two restaurants, All-You-Can-Eat Café and GoodGrub Diner, operate in a duopoly. Both restaurants disregard health and safety regulations, but they continue to have customers because they are the only restaurants within 80 miles of town. Both restaurants know that if they clean up, they will attract more customers, but this also means that they will have to pay workers to do the cleaning. If neither restaurant cleans, each will earn $12,000; alternatively, if they both hire workers to clean, each will earn only $9,000. However, if one cleans and the other doesn't, more customers will choose the cleaner restaurant; the cleaner restaurant will make $16,000, and the other restaurant will make only $4,000.
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