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.
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.
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.
1. Which one of the following was NOT discussed in the text as a main contributor to variations in labor productivity? a. The efficiency with which workers apply their skills. b. The skills of the worker. c. The level of effort with which workers work. d. The opportunity cost workers face for paid labor. e. The quantity and characteristics of the resources available to each worker. 2. Advertising and firm location are examples of tacit collusion. True or False 3....
If two noncooperative firms face a “prisoner's dilemma”-type duopoly situation in regard to setting their prices high or low, which of the following is true? A. The companies will end up at a situation that is worse for them, than what they could reach if they were able to communicate and cooperate B. The companies will end up colluding, pricing high to keep profits up C. One company will gain large profits while the other suffers from low profits D....
Chapter 13 Vocabulary a. Non-price competition b. Cartel c. Prisoner’s dilemma d. Excess capacity e. Collusion f. Differentiated product g. Herfindahl index h. Duopoly i. Monopolistic competition j. Oligopoly ( ) 7. Five or fewer firms produce most of the output in an industry, or control a large share of the market. ( ) 5. Most type of retail stores, like J. Crew, fall into this market category. ( ) 8. This is a two-firm oligopoly. ( ) 1. In...
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...
The following payoff matrix depicts two companies, Lowe's and Home Depot, in an advertising game. The companies will be playing the same game several times. Each company makes its decision without knowing what the other chooses. The payoffs for each firm represent economic profits.Imagine that at the beginning of each week, Home Depot and Lowe's play the game described in the payoff matrix above. Assume there is no known end to the game, so Home Depot and Lowe's will effectively...
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...
i will give a thumb up for sure if it helps me :) Please Summarize this article about Communicating competitive information,and Applying Game Theory To Managing Price Competition. Pricing Strategies Course -No longer than 400 words. Like any other type of market research, information about competitors will be most valuable if it is collected and stored in a systematic way. Activities such as shopping the competition should be done thoroughly and periodically. Information from different sources should be merged into...