Econ Homework Help

[Black Truck 10 10+ year member]

Does anyone out there know how to solve this?

Firm A is an incumbent in a market lasting two periods with inverse demand curve p

=148-9Q. Its first-period costs are C = 30 + 40q and it faces entry in the second period by Firm B, which has identical cost. However, there is an asymmetry between firms in that only Firm A has the option of raising fixed cost for both firms in period 2 by $150 (each increased by $150) while firm B cannot do so. Assume that entry would result in a Cournot duopoly. Using the extensive-form representation of this game to find out the equilibrium result, and the quantity, output, profit for each choice. Show all your work.

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[dragnix 5,000+ posts]

bankruptcy is the correct answer

 

[SRim23 5,000+ posts]

Where's Flip when you need him!

hes always talking about his extensive Econ/Finance background.

 

[Black Truck 10 10+ year member]

haha well I really need his help because I have 4 problems and im willing to pay 20 to who can solve them for me. This is the difference in me getting the grade or not for my summer school!