Question:I need help with these solutions for this homework question. Studying for a midterm and want to know the steps and solutions as a document for these answers. If i could get it in the next 5 hours i will tip an extra 10. Thank you so much!
Sample Question 1
Suppose market demand is P = 150 - Q, cost of production of each firm is C(qi) = 30qi . Assume there are two firms,1 and 2, engaging in a Cournot competition. Consider a price-fixing (or collusion) agreement between them to achieve monopoly price (hence the price-fixing).
1) Draw the normal form of the game where either firm can choose to Cooperate or Defect.
2) Is collusion an equilibrium?
3) What is the equilibrium?