Aa / suppose that boeing and rolls-royce holdings are the sole producers of a particular jet engine. the two firms currently charge the same price for their products. if neither firm reduces the price of its engine, each firm earns $36 million in profit. if both firms reduce their prices, then each firm will earn $10 million in profit. if one firm reduces its price and the other does not, then the firm that reduces price will earn a profit of $50 million while the other firm will earn a profit of $5 million.
1/ if the firms can operate as a cartel, then
a/each firm will reduce its pric
.b/ each firm will maintain its current price.
c/boeing will reduce its price and rolls-royce holdings will maintain its current price
d/ rolls-royce holdings will reduce its price and boeing will maintain its current price
2/ assuming that collusion is not a possibility, the nash equilibrium occurs when
a. each firm reduces its price.
b. each firm maintains its current price.
c. rolls-royce holdings reduces its price and boeing maintains its current price.
d. boeing reduces its price and rolls-royce holdings maintains its current price.