ECONOMICS - UPDATED
20th Edition
ISBN: 9781259795862
Author: McConnell
Publisher: MCGRAW-HILL CUSTOM PUBLISHING
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Question
Chapter 21, Problem 13DQ
To determine
Collusion and anti-trust law.
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Students have asked these similar questions
The inverse demand for a homogenous-product Stackelberg duopoly is P = 10-Q where Q=Q1 + Q2.
The cost structure for the two firms, respectively, are C(Q1) = 4Q1 and C2(Q2) = 2Q2.
Suppose Firm 2 is the leader.
What is the equilibrium profit for the leader?
O 7.5
O 10.5
O 12.5
O 0.5
O 0.25
Rawlding is a manufacturer in the oligopolistically competitive market for footballs. Two other manufacturers, Spaldon and Wilke, compete with
Rawlding for football consumers. Rawlding faces the demand curve for footballs depicted on the graph. Initially, Rawlding charges $30 per football,
producing and selling 7 million footballs per year.
PRICE (Dollars per ball)
36
35
34
33
32
31
30
29
28
27
26
O
7
8
FOOTBALLS (Millions of balls)
9
10
G
As an oligopolist, Rawlding is a price maker. If Rawlding raises the price of its football from $30 to $32 per ball, the quantity of Rawlding footballs
demanded
by million footballs per year. If Rawlding reduces the price of its football from $30 to $28 per ball, the quantity of
by million footballs per year. (Hint: Click on the points on the graph to see their coordinates.)
footballs demanded
If Rawlding raises the price of its football above $30, the kinked demand curve model suggests that Spaldon and Wilke will respond by
The portion of Rawlding's…
Ma3.
You operate in a duopoly in which you and a rival must simultaneously decide what price to charge for the same homogeneous product. Assume each you and your rival can choose a “low price” or a “high price”. If you each charge a low price, you each earn zero profits. If you each charge a high price, you each earn profits of $3 million. If you charge different prices, the one charging the high price loses $5 million and the one charging the low price makes $5 million.
What is the Nash equilibrium for the non-repeated version of this game?
Now suppose the game is infinitely repeated. If the interest rate is 10%, can you do better than you could in the non-repeated version of this game? If your answer is “yes”, provide the players’ strategies and any other conditions that must hold.
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