Table 17-4
Only Two Firms, JKL and XYZ, Sell a Particular

question 82

Multiple Choice

Table 17-4
Only two firms, JKL and XYZ, sell a particular product. The following table shows the demand curve for their product. Each firm has the same constant marginal cost of $8 and zero fixed cost.
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$$\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Price } \\\text { (Dollars per unit) }\end{array} & \begin{array} { c } \text { Quantity Demanded } \\\text { (Units) }\end{array} & \begin{array} { c } \text { Total Revenue } \\\text { (Dollars) }\end{array} \\\hline 28 & 0 & 0 \\\hline 26 & 5 & 130 \\\hline 24 & 10 & 240 \\\hline 22 & 15 & 330 \\\hline 20 & 20 & 400 \\\hline 18 & 25 & 450 \\\hline 16 & 30 & 480 \\\hline 14 & 35 & 490 \\\hline 12 & 40 & 480 \\\hline 10 & 45 & 450 \\\hline 8 & 50 & 400 \\\hline 6 & 55 & 330 \\\hline 4 & 60 & 240 \\\hline 2 & 65 & 130 \\\hline 0 & 70 & 0 \\\hline\end{array}$$ ​
-Refer to Table 17-4. How much less do each of these firms earn in the Nash equilibrium than if they jointly maximize profits?

• A)$40.00
• B)$10.00
• C)$140.00
• D)$20.00

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Definitions:

Indicator Variable

A variable that takes the value of 1 if a certain condition is true and 0 if it is not.

Dependent Variable

The variable in an experiment or study that is expected to change in response to changes in the independent variable.

Stepwise Regression

A method of fitting regression models in which predictors are added or removed based on specific criteria, such as their statistical significance.

Regression Model

A statistical technique that models and approximates the relationship between a dependent and one or more independent variables.