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Author Question: When there's uncertainty as to the length of a game A) cooperation still does not occur, because ... (Read 15 times)

hbsimmons88

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on: Jul 1, 2018
When there's uncertainty as to the length of a game
 
  A) cooperation still does not occur, because cooperation unravels at the beginning of the game.
  B) cooperation can potentially occur if trigger strategies are adopted.
  C) firms will cooperate because they treat the game as one that is infinitely repeated.
  D) firms will randomly pick among the Nash equilibria.

Question 2

Suppose a monopolist has TC = 100 + 10Q + 2Q2, and the demand curve it faces is p = 90 - 2Q. What will be the price, quantity, and profit for this firm?
 
  What will be an ideal response?


shaquita

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Reply #1 on: Jul 1, 2018
Answer to Question 1

B

Answer to Question 2

First, determine MR = 90 - 4Q. Second, MC = 10 + 4Q. Setting MR = MC yields
90 - 4Q = 10 + 4Q. Rearranging yields 80 = 8Q or Q = 10. Price equals 90 - 2(10 ) = 70. Total revenue = 70  10 = 700. Total cost equals 100 + 10(10 ) + 2(102 ) = 400. Profit equals
700 - 400 = 300.


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