In the “prisoner’s dilemma” duopoly game, if each firm chooses the price level that is most...
In the “prisoner’s dilemma” duopoly game, if each firm chooses the price level that is most profitable no matter what the other company does, then
Select one:
a. the companies can end up colluding, pricing high to keep profits up.
b. the companies end up pricing low, leading to very low profits.
c. one company can gain large profits while the other suffers from low profits.
d. There is no clear result.
e. None of the above is correct.
Homework Answers
When the companies don't know about each other strategies then, they may end up as one company can gain large profits while the other suffers from low profits. Therefore, Option C is correct.
Add Answer to:
In the “prisoner’s dilemma” duopoly game, if each firm chooses
the price level that is most...
In the “prisoner’s dilemma” duopoly game, if each firm chooses the price level that is most...
In the “prisoner’s dilemma” duopoly game, if each firm chooses the price level that is most profitable no matter what the other company does, then a. the companies can end up colluding, pricing high to keep profits up. b. the companies end up pricing low, leading to very low profits. c. one company can gain large profits while the other suffers from low profits. d. There is no clear result. e. None of the above is correct.
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Two companies, Chevron and Shell, are the only two gas stations operating in a small town. Each company must simultaneously display their prices, choosing between a high price and low price. The profi...
Two companies, Chevron and Shell, are the only two gas stations
operating in a small town. Each company must simultaneously display
their prices, choosing between a high price and low price. The
profits each firm can potentially earn are displayed in the payoff
matrix displayed below:
a. What is Chevron’s most likely decision (what is their
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Below is a recommended topic for this discussion. If your instructor chooses a different “Making the...
Below is a recommended topic for this discussion. If
your instructor chooses a different “Making the Connection” from
this weeks’ readings or another alternate discussion topic, his or
her chosen topic and any required work in MyEconLab or elsewhere
will be in the instructors’ first posting.
Read the Making the Connection short case titled Can a
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Chapter 21 of our textbook, and also be sure to watch the video...
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mework SP 18 Monopolistic Competition Oligopoly and Game Theory (Ch 11) My Home 4. Using a payoff matrix to determine the equilibrium outcome Courses show Soose there are only two firms ta m artphones, one and tech. The comany will cam, depending on whether its a high or low price for its phones Browse Catalog Pitch Pricing Partner Offers on Pricing Print Options theo, and tech how t Assume this s h e prices on the high ites a nd...
Daisy and Petunia are flower vendors that operate in a duopoly (two-firm oligopoly). The daily marginal cost (MC) of producing a bouquet of flowers is constant and equals $1.20 per bouquet. Assume that neither firm had any startup costs. That is, marginal cost equals average cost (AC) for each firm. Suppose that Daisy and Petunia form a cartel, and the firms divide the output evenly. (Note: This is only for convenience, since nothing in the model requires that the two...
Two companies, Chevron and Shell, are the only two gas stations
operating in a small town. Each company must simultaneously display
their prices, choosing between a high price and low price. The
profits each firm can potentially earn are displayed in the payoff
matrix displayed below:
a. What is Chevron’s most likely decision (what is their
dominant strategy)?
b. What is Shell’s most likely decision (what is their dominant
strategy)?
c. What is the most expected outcome (what is the...
Below is a recommended topic for this discussion. If
your instructor chooses a different “Making the Connection” from
this weeks’ readings or another alternate discussion topic, his or
her chosen topic and any required work in MyEconLab or elsewhere
will be in the instructors’ first posting.
Read the Making the Connection short case titled Can a
Recession Be a Good Time for a Business to Expand? in
Chapter 21 of our textbook, and also be sure to watch the video...
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