Game Theory Solutions & Answers to Exercise Set 1
P(Q) = 140 Q= 20 Q= 120 In such a case rms’ pro ts are zero. The quantity produced by a monopoly is obtained by the usual rst order condition: M = (140 q M)q M 20q M @ M @q M = 140 2q M 20 = 0 q M = 60 The price under monopoly is P(q M) = 140 60 = 80 and pro ts are M = 80 60 20 60 = 3600 ................
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