Microeconomics (13th Edition)
Microeconomics (13th Edition)
13th Edition
ISBN: 9780134744476
Author: Michael Parkin
Publisher: PEARSON
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Chapter 15, Problem 18APA
To determine

Construct thepayoff matrix of Agile and Wanabe, then identify whether Wannabe enter the market or not.

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Suppose two companies, Apples and Dell, are a competing duopoly. If both companies charge the high price, they each earn $700 million in economic profit. If both companies charge the low price, they each earn $500 million in economic profit. If one company charges a high price and the other a low price, the company charging the higher price earns $450 million in economic profit and the company charging the lower price earns $800 million in economic profit. 1. What is the Nash equilibrium? Select all possible answers from the answer list.  2. Thinking back to your answer for the Nash equilibrium, can firms do better than the outcome you identified? Explain.
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