Author Question: Refer to Table 14-2. Is the current strategy in which each firm charges the low price and earns a ... (Read 51 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?

Signs and symptoms of a drug overdose include losing consciousness, fever or sweating, breathing problems, abnormal pulse, and changes in skin color.

Did you know?

Thyroid conditions cause a higher risk of fibromyalgia and chronic fatigue syndrome.

Did you know?

The most dangerous mercury compound, dimethyl mercury, is so toxic that even a few microliters spilled on the skin can cause death. Mercury has been shown to accumulate in higher amounts in the following types of fish than other types: swordfish, shark, mackerel, tilefish, crab, and tuna.

Did you know?

The people with the highest levels of LDL are Mexican American males and non-Hispanic black females.

Did you know?

Drugs are in development that may cure asthma and hay fever once and for all. They target leukotrienes, which are known to cause tightening of the air passages in the lungs and increase mucus productions in nasal passages.

For a complete list of videos, visit our video library