Managers of two competing oligopoly firms, Amazon and Nile, must make their pricing decisions simultaneously. Amazon (A) and Nile (
N) face the following demand and long-run cost conditions, which are common knowledge to the managers: The prices, and , are the prices charged by Amazon and Nile, respectively. The quantities, and , are the respective daily quantities sold by each firm. The figure below shows Nile's best-response curve, . Only one point on Amazon's best-response curve, point K, is shown in the figure. -When Amazon believes Nile is going to charge a price of $30, Amazon's best response is to charge a price of $________. Plot this price pair on the graph, label it J, and then draw the best-response curve for Amazon (label this line ).

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The Answer of Managers of two competing oligopoly firms, Amazon and Nile, must make their pricing decisions simultaneously. Amazon (A) and Nile (
N) face the following demand and long-run cost conditions, which are common knowledge to the managers: The prices, and , are the prices charged by Amazon and Nile, respectively. The quantities, and , are the respective daily quantities sold by each firm. The figure below shows Nile's best-response curve, . Only one point on Amazon's best-response curve, point K, is shown in the figure. -When Amazon believes Nile is going to charge a price of $30, Amazon's best response is to charge a price of $________. Plot this price pair on the graph, label it J, and then draw the best-response curve for Amazon (label this line ).

Managers of Two Competing Oligopoly Firms, Amazon and Nile, Must