Question 2 Mart00 quedan Consider the following Bertrand modet Firm 1 and Firm 2 are...
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Question 2 Mart00 quedan Consider the following Bertrand modet Firm 1 and Firm 2 are both producing tables. For each firm, the marginal cost is 5 Their products are exactly the same so consumers buy from the firm whose price is lower. In case the prices are the same, hall at the consumer will buy from firm 1 and half of them will buy from firm 2. There are 100 people and each of them will buy cactly one thair Let p1 be Firm 1's price. Let p2 be Firm 25 price. The prices must be integers: 50, a firm cannot choose its price to be 5.6 or 47. It has to pick an Integer: 0,1,2,3,4,... (a) Is (p1.p2)-(5,5) a Nash equilibrium? Explain why or why not. (You get credit for your explanation) (b) is (P1.p2)=(5,6) a Nash equilibrlum? Explain why or why nat. (You get credit for your explanation.) Note: You get credit for your explanation. No explanation, no credits
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