Author Question: Refer to Table 14-2. Is the current strategy in which each firm charges the low price and earns a ... (Read 52 times)

swpotter12

  • Hero Member
  • *****
  • Posts: 527
Refer to Table 14-2. Is the current strategy in which each firm charges the low price and earns a profit of 7,000 a Nash equilibrium? If not, why and what is the Nash equilibrium?
 
  A) No, it is not a Nash equilibrium because each firm can do better by charging the high price. The Nash equilibrium occurs when each firm charges the high price and earns a profit of 10,000.
  B) No, the current situation is not a Nash equilibrium. The Nash equilibrium for each firm is to have the other charge a high price and for the firm in question charge a low price.
  C) Yes, the current situation is a Nash equilibrium.
  D) No, the current situation is not a Nash equilibrium; it is a dominant strategy equilibrium. There is no Nash equilibrium in this game.

Question 2

If a firm's average total cost is less than price where MR = MC
 
  A) the firm should shut down.
  B) the firm should cut back on its output to lower its cost.
  C) the firm should continue to produce the output it is producing.
  D) the firm should raise its price.


kristenb95

  • Sr. Member
  • ****
  • Posts: 318
Answer to Question 1

C

Answer to Question 2

C



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

During the twentieth century, a variant of the metric system was used in Russia and France in which the base unit of mass was the tonne. Instead of kilograms, this system used millitonnes (mt).

Did you know?

Pope Sylvester II tried to introduce Arabic numbers into Europe between the years 999 and 1003, but their use did not catch on for a few more centuries, and Roman numerals continued to be the primary number system.

Did you know?

The modern decimal position system was the invention of the Hindus (around 800 AD), involving the placing of numerals to indicate their value (units, tens, hundreds, and so on).

Did you know?

The first successful kidney transplant was performed in 1954 and occurred in Boston. A kidney from an identical twin was transplanted into his dying brother's body and was not rejected because it did not appear foreign to his body.

Did you know?

Approximately one in three babies in the United States is now delivered by cesarean section. The number of cesarean sections in the United States has risen 46% since 1996.

For a complete list of videos, visit our video library