Table 16-5

-Refer to Table 16-5.This table shows the demand schedule for a particular product.Suppose the market for this product is served by two firms who each chooses its output independently.If the marginal cost to produce this product is $0,what is the Nash equilibrium production level for each firm?
A)3 units
B)4 units
C)5 units
D)6 units

Question

Table 16-5
 
-Refer to Table 16-5.This table shows the demand schedule for a particular product.Suppose the market for this product is served by two firms who each chooses its output independently.If the marginal cost to produce this product is $0,what is the Nash equilibrium production level for each firm?
A)3 units 
B)4 units 
C)5 units 
D)6 units

Quizplus · Accepted Answer

The Nash equilibrium production level for each firm is 3 units. This is because each firm will choose the output level that maximizes its profit, given the output level of the other firm. If one firm produces more than 3 units, the other firm will produce less than 3 units, and the first firm will earn less profit. If one firm produces less than 3 units, the other firm will produce more than 3 units, and the first firm will earn less profit. Therefore, the Nash equilibrium production level for each firm is 3 units.

Table 16-5 -Refer to Table 16-5.This Table Shows the Demand Schedule for the Demand