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Firm B Low Price High Price Firm A Low Price (10, 9) (15, 8) High Price...
Firm B Low Price High Price Low Price 100, 100 600,50 High Price 50, 600 500, 500 Is there a dominant strategy for firms A and B? If so, what are these strategies? What payoff will each firm receive? Is this a prisoner's dilemma? What is the cooperative outcome? What is the noncooperative outcome? If they cooperate is there an incentive to cheat? Explain
5. Suppose two firms A and B must decide whether to charge low or high price for a product. If both firms charge high price each firm earns a profit of 10. If both firms charge a low price, each firm earns zero profit. If firm A charges a low price while firm B charges a high price, firm A earns a profit of 50 while firm B has a loss of 10. If firm B charges a low price...
Firm B High Price Low Price High Price A:8 B:8 A;3 B:20 Low Price A:20 B:3 A:6 B:6 *Firm A on Left, Firm B on top - What is the PV of profits if the firms collude successfully assuming an interest rate of 15%? - What is PV of profits for Firm A if it defects from the collusive behavior assuming an interest rate of 15%?
X fx alue Response (click on correct answer) Firm 1 Low Price High Price Low Price ons 7-9: Two firms face the payoff matrix on the right. The payoff in the upper right corners are for Firm 1 and the payoffs in the lower left corners are for Firm 2. Both firms decide simultaneously whether to set a high price or a low price. Both firms know its own and its rival's payoffs. Firm High Price 2 Dominant strategies are...
Dell and Sony compete primarily by price. Each firm must choose either a high price or a low price simultaneously. Use the following information to create the profit matrix: If Dell and Sony both set high prices, Dell’s profit is $40 million and Sony’s profit is $35 million. If Dell sets high price and Sony sets low price, Dell’s profit is $25 million and Sony’s profit is $40 million. If Dell sets low price and Sony sets high price, Dell’s...
Firm K Strategy A B Firm J X 8, 8 18, -4 Y -4, 18 10, 10 Does Firm J have a dominant strategy? If so, what is it? Identify all of the Nash equilibrium positions. If there is no Nash equilibrium, indicate “None.”
ake Test: Homework 11. Monopoly, Oligopoly, Gam. QUESTION 17 Figure 14-4 Firm A Low Output High Output 23 Low Output Firm B 25 40 High Output 15 30 Reference: Ref 14-4 Given the information in Figure 14-4, if x O Firm A 0 Firm B O both Firm A and Firm B 10 and y = 15, which firm has a dominant strategy? neither Firm A nor Firm B QUESTION 18
Refer to the following normal form game of price competition. Firm B Low Price Low Price 0,0 Firm A High Price -2, 17 High Price 17,-2 9,9 Suppose the game is infinitely repeated, and the interest rate is 10%. Both firms agree to charge a high price, provided no player has charged a low price in the past. If both firms stick to this agreement, then the present value of Firm A's payoffs are: $0.82 $9 $99 $187
Two firms, Small and Large, compete by price. Each can choose either a low price or a high price. The following payoff table shows the profit (in thousands of dollars) each firm would earn in each of the four possible decision situations: Small Low price High price Large Low price $1,000, $500 $375, $250 High price $550, –$100 $575, –$200 a) Is there a dominant strategy for Small? If so, what is it? Why? b) Is there a dominant strategy...
Suppose a firm can charge a relatively low price to try to compete actively with its rivals, or it can charge a relatively high, collusive price. If its strategy is to charge the ow price regardless of the other firms' decisions, this low-prioe is the firm's O A dependent strategy OB, kinked strategy. OC. dominant strategy OD. independent strategy.