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In: Economics

The can industry is composed of two firms. Suppose that the demand curve for cans is...

The can industry is composed of two firms. Suppose that the demand curve for cans is P= 100- Q and the total cost function of each firm is TC = 2 + 15q.

b) If only one firm enters a new market, how much will each firm produce and will make the profit?

c) If both enter the new market, how much will each firm produce and will make the profit?

e) If these two firms collude and they want to maximize their combined profit, how much will the firm A produce? And Profit?

f) How much will the Firm B produce?

g) Is this collusion would work? Why or why not?

h) If the Firm A moves first, how much profit for each firm will change? Construct the game tree and find Nash EQ

Solutions

Expert Solution

Rahul Sunny answered 7 months ago
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