Firm X and firm Y are the only two Internet providers in a small town.The demand for Internet subscriptions is P = 60 - Q.Neither firm X nor firm Y has any fixed costs.The marginal cost of firm X is constant at $10,and the marginal cost of firm Y is constant at $20.Each firm can sell either 10 or 20 subscriptions,and they meet only once in this market.
(A)Create the payoff matrix.Show your calculations and explain verbally as necessary.
(B)Find the Nash equilibrium or equilibria.Explain verbally.
(C)If there are multiple equilibria,which equilibrium do you think is most likely to occur,and why?

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The Answer of Firm X and firm Y are the only two Internet providers in a small town.The demand for Internet subscriptions is P = 60 - Q.Neither firm X nor firm Y has any fixed costs.The marginal cost of firm X is constant at $10,and the marginal cost of firm Y is constant at $20.Each firm can sell either 10 or 20 subscriptions,and they meet only once in this market.
(A)Create the payoff matrix.Show your calculations and explain verbally as necessary.
(B)Find the Nash equilibrium or equilibria.Explain verbally.
(C)If there are multiple equilibria,which equilibrium do you think is most likely to occur,and why?

Firm X and Firm Y Are the Only Two Internet