Question 6 [CLO4, 6 marks) Assume Firm 1 and 2 share the demand in a given market. Assume the total costs for firm 1 and

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Question 6 Clo4 6 Marks Assume Firm 1 And 2 Share The Demand In A Given Market Assume The Total Costs For Firm 1 And 1 (29.83 KiB) Viewed 34 times

Question 6 [CLO4, 6 marks) Assume Firm 1 and 2 share the demand in a given market. Assume the total costs for firm 1 and firm 2 is TC-50². Assume the total revenue function for firm 1 and firm 2 is TR-1000-0². Assume they choose the amount to produce simultaneously. Suppose they can choose between producing 4 or 7.6 units. Questions: 1-Complete table I below and find the payoffs (profits, II, for firm 1, II; for firm 2) for each firm given the two simultaneous choices. Hint: use the information given above to find the profits of each firm in correspondence of each pair of production decisions. (4 marks] Table 1 Firm 1 Strategy Produce 4 Produce 7.6 Produce 4 П1= П₁= . n₂= 2-Is there an equilibrium? Discuss [2 marks]. П2= Firm 2 Produce 7,6 П1= П1= . M₂= П2= . In order to complete the matrix of payoffs the amount produced has to be substituted into the total revenue and total cost function respectively The equilibrium is in correspondence of 7.6.7.6.