The following market is a duopoly populated only by the companies Alpha and Beta. They produce and sell identical produc

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The Following Market Is A Duopoly Populated Only By The Companies Alpha And Beta They Produce And Sell Identical Produc 1 (187.03 KiB) Viewed 41 times

The following market is a duopoly populated only by the companies Alpha and Beta. They produce and sell identical products. The graph below shows the market demand for the product. Both firms face zero marginal cost at every level of output. If one of the firms charges a lower price than the other, the firm charging the lower price will enjoy the entire quantity demanded by all the customers in the market. If the two firms charge the same price, each will have an equal share the quantity demanded at that price. Price, MR ($) 4.5 A 3.5 3 2.5 2 1.5 1 2 0.5 0 0 2 Output 3 -Demand -MR Assume both firms have the goal of maximising their own economic profit. If the two firms do not communicate with each other, and they simultaneously choose their own prices, what will be the Nash equilibrium price for both of them? O a. 53 O D.52 O $3.50 0 4.54 0 €.50 Of. $1 2