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Han Chapter 11 Problem 6 2 Start

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Problem 6-2 Use a cell reference or a single formula where appropriate in order to receive full cre values or type values, as you will not receive full credit for your answers. The inverse market demand curve for a duopoly market is p = 14 - Q = 14 - q 1 - q 2, wher q 1 and q 2 are the outputs of Firms 1 and 2 respectively. Each firm has a constant marginal 4. Consequently, the Nash-Cournot best-response curve for Firm 1 is q 1 = 6 - q 2/2. The be is q 2 = 6 - q 1/2, which can be written as q 1 = 12 - 2q 2. p q1 q2 MC FC = = = = = 14 6 6 2 4 - Q = q2/ 2 q1/ 2 a) Calculate the output (BR2) and the profit for Firm 2, the total output, and the price BR2 6,0 5,5 5,0 4,5 4,0 3,5 3,0 2,5 2,0 1,5 1,0 0,5 0,0 q1 0 1 2 3 4 5 6 7 8 9 10 11 12 Q 6,0 6,5 7,0 7,5 8,0 8,5 9,0 9,5 10,0 10,5 11,0 11,5 12,0 p $8,0 $7,5 $7,0 $6,5 $6,0 $5,5 $5,0 $4,5 $4,0 $3,5 $3,0 $2,5 $2,0 Profit2 $32,0 $26,3 $21,0 $16,3 $12,0 $8,3 $5,0 $2,3 $0,0 -$1,8 -$3,0 -$3,8 -$4,0 Use the scatterplot option to draw the best-response curve for Firm 2. Best Response Curve of Firm 2 14 Output of firm 1, q1 12 10 8 6 4 2 0 0,0 1,0 2,0 3,0 4,0 5,0 6,0 Output of firm 2, q2 b) Calculate the output (best response) for Firm 1 for q 2 = 0, 2, ..., 12. Best Response of Firm 1 q2 BR1 0 6,0 1 5,5 2 5,0 3 4,5 4 4,0 5 3,5 6 3,0 7 2,5 8 2,0 9 1,5 10 1,0 11 0,5 12 0,0 Use the scatterplot option to draw the best-response curves for Firm 1 and Firm 2 Nash-Cournot Equilibrium Output of firm 1, q1 14,0 12,0 10,0 ...
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