Two Firms Are Competing in a Duopoly and Are Trying

question 66

Essay

Two firms are competing in a duopoly and are trying to decide which price to set.The two prices under consideration are a high monopoly price and a low competitive level.If both seller A and seller B chose the monopoly price,each will make $20 million of economic profit.However,if one picks the monopoly price while the other picks the competitive price,the high-price firm will lose $1 million while the low-price firm will make $32 million.If both sell at the competitive level,they both make zero economic profit.Complete the payoff matrix below and determine the Nash equilibrium.

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Definitions:

Conflict Approaches

A perspective within sociology that focuses on the social, political, or material inequalities of a social group, analyzing the conflict between competing interests.

Functionalist

A perspective in sociology that sees society as a complex system whose parts work together to promote solidarity and stability.

Crime

An action or omission that constitutes an offense punishable by law.

Deviance

Behaviors, actions, or conditions that violate societal norms or standards, leading to social disapproval, sanction, or exclusion.