Figure 1 $\begin{array}{|c|c|}
\hline \text { Price } & \text { Quantity } \
\hline € 6 & 0 \
\hline 5 & 1000 \
\hline 4 & 2000 \
\hline 3 & 3000 \
\hline 2 & 4000 \
\hline 1 & 5000 \
\hline 0 & 6000 \
\hline
\end{array}$
-Refer to Figure 1. If the duopolists are unable to collude, how much profit will each earn when the market reaches a Nash equilibrium?

Question

Quizplus · Accepted Answer

In a Nash equilibrium, neither firm has an incentive to deviate from their current strategy, given the other firm's strategy. In this case, both firms will choose to produce 3000 units each, since that is the quantity where their profit is maximized based on the other firm producing the same quantity. At 3000 units, the price will be €3, so each firm's profit will be (€3 - €2) x 3000 = €3,000. Thus, their total profit is 2 x €3,000 = €6,000.

Figure 1 -Refer to Figure 1