Answer to Question #50482 in Microeconomics for nidhi
The graph shows the various combinations of amounts of two commodities
that an economy can produce (e.g., number of guns vs kilos of butter)
using a fixed amount of each of the factors of production. Graphically
bounding the production set for fixed input quantities, the PPF curve
shows the maximum possible production level of one commodity for any
given production level of the other, given the existing state of
(b) In this case, the competitive equilibrium can't be found, as there is not enough data.
(c) If every consumer owns 100 units of labour and owns one firm, the competitive equilibrium will change.
(d) We can't find the Pareto efficient allocations for this economy, because there is not enough data.
2. An essential assumption of this model is the "not conjecture" that each firm aims to maximize profits, based on the expectation that its
own output decision will not have an effect on the decisions of its
rivals. The market price is set at a level such that demand equals the
total quantity produced by all firms. Each firm takes the quantity set
by its competitors as a given, evaluates its residual demand, and then
behaves as a monopoly.
If the firms have identical cost functions given by C (Q) = 40 Q, so every firm produce the quantity, for which MR = MC.
MC = C' = 40
MR = TR' = (P*Q)' = ((100 - Q)*Q)' = 100 - 2Q
So, 100 - 2Q = 40,
Q = 30
So, the equilibrium industry output if the producers are Cournot competitors is 30*4 = 120 units.
The market price is P = 100 - 30 = $70.
Total profits of each firm are: TP = TR - TC = P*Q - TC = 70*30 - 40*30 = $900.
(a) A game can have either a pure-strategy or a mixed Nash Equilibrium.
(In the latter a pure strategy is chosen stochastically with a fixed
probability). Nash proved that if we allow mixed strategies, then every
game with a finite number of players in which each player can choose
from finitely many pure strategies has at least one Nash equilibrium.
(b) The Nash equilibrium of the following game is in the point (2,2).
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a consumer's utility function is given as U(x,y)= ln( x+2*y-y^2/2) where x and y are two goods of consumption . (a) find indirect utility function .