Homework Answers
Option (C) is correct answer. I.e both firms cuts the price .
In this game only one nash equilibrium I.e (6,6) it means first A cuts the price and firm B cuts the price because when firm 2 choose cuts price then firm 1 choose also cuts the price because he get higher payoff to choose this and if firm 2 choose colludes then firm 1 again choose cut prices. NOW if firm 1 choose cut prices then firm 2 choose cuts price and if firm 1 choose colludes then firm 2 again choose cut prices. Therefore both firm choose cuts prices.
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Consider the following payoff matrix for a game in which two firms attempt to collude under...
The table below is the payoff marrix for a simple two-firm game Firms A and B...
The table below is the payoff marrix for a simple two-firm game Firms A and B are bidding on a government contract and each f's bid is not known by the other form. Each firm can bid other $14.000 or 55.000 The cost of completing the project for each firm is 53.000 The low bid firm will win the contractat its stated price the high dem wilgot nothing the two bids are equal, the two firms wil split the price...
Q4. Suppose a duopoly is characterized by the following profits: if the two firms collude and...
Q4. Suppose a duopoly is characterized by the following profits: if the two firms collude and charge the joint profit-maximizing price, they each earn a profit equal to 1500 in each period; if the two firms charge the Cournot–Nash price, they each earn a profit equal to 1200 in each period; and if one firm defects while the other charges the joint profit-maximizing price, the firm that defects earns 3000 and the other earns 0. [20 marks] a) [3 marks]...
Question 43 10 pts (10 marks: 1 mark each) Use the following payoff matrix for a...
Question 43 10 pts (10 marks: 1 mark each) Use the following payoff matrix for a 2-firm oligopoly to answer the questions below Firm A: High Price Low Price A-1000 A-1250 High Price B = 1000 B = 300 Firm B: A-300 A = 700; Low Price B-1250 B-700 a. If the two firms above collude, the profits for each of the 2 firms would be: Firm A Profits Firm B Profits a. If the two firms above collude, the...
Assume there are only two firms in the wine industry. Assume these firms cooperate and that...
Assume there are only two firms in the wine industry. Assume these firms cooperate and that they only compete with regards to advertising. Both firms know they face the following payoff matrix. Assume this is a one-period game. Firm A Increase Advertising Decrease Advertising Increase 100,100 10,200 Advertising Firm B Decrease 200,10 150,150 Advertising Assume the payoffs are the firm's profits (in millions of dollars). (A) Given the above payoff...
(10 marks: 1 mark each) Use the following payoff matrix for a 2-firm oligopoly to answer...
(10 marks: 1 mark each) Use the following payoff matrix for a 2-firm oligopoly to answer the questions below Firm A: High Price Low Price A = 1000: A = 1250; High Price B = 1000 B = 300 Firm B: A = 300; A = 700; Low Price B = 1250 B = 700 a. If the two firms above collude, the profits for each of the 2 firms would be: Firm A Profits Firm B Profits b. Suppose...
Consider the game represented by the payoff matrix below. Two firms are colluding and setting high...
Consider the game represented by the payoff matrix below. Two firms are colluding and setting high 3. prices. Each of the firms can apply for leniency with the antitrust authority or stay silent If a firm applies for lenciency and becomes a whistleblower and the other firm does not, the whistleblower receives a reward of R. If both firms apply for lenciency and become whistleblowers, they receive half of the reward. If both firms stay silent, the the antitrust authority...
The payoff matrix below shows the payoffs (in millions of dollars) for two firms, A and...
The payoff matrix below shows the payoffs (in millions of
dollars) for two firms, A and B, for two different strategies,
investing in new capital or not investing in new capital.
This game is an example of a:
Select one:
a. cartel.
b. credible promise.
c. prisoner's dilemma.
d. game with multiple equilibria.
Firm B Invest Not invest 20 for A 20 for B 70 for A Invest 5 for B Firm A 5 for A 50 for A Not...
consider the standard Bertrand model of price competition. There are two firms that produce a homogenous...
consider the standard Bertrand model of price competition. There
are two firms that produce a homogenous good with the same constant
marginal cost of c.
a) Suppose that the rule for splitting up cunsumers when the
prices are equal assigns all consumers to firm1 when both firms
charge the same price. show that (p1,p2) =(c,c) is a Nash
equilibrium and that no other pair of prices is a Nash
equilibrium.
b) Now, we assume that the Bertrand game in part...
options are: b) small, large The table below shows the payoff matrix for a game between...
options are:
b) small, large
The table below shows the payoff matrix for a game between Toyota and Honda, each of which is contemplating building a factory in a new market Each firm can other build a small factory (and produce a small number of cars) or build a large factory (and produce a large number of cars). Suppose no other car manufacturers are selling in this market Toyota's Decision Small Factory Large Factory High Industry Price Medium Industry Price...
PRACTICE PROBLEMS FOR WEEK 6 Question: [Collusion when firms compete over time] Suppose two firms producing...
PRACTICE PROBLEMS FOR WEEK 6 Question: [Collusion when firms compete over time] Suppose two firms producing differentiated goods compete every day through prices. The demand for the good produced by firm i E {1,2} is qi = 24 – 5pi + 2p;. Firms can produce the goods with a constant marginal cost of production of O per unit. Hence, firm i's profit is given by T(Pi, p;) = (pi – 0) (24 – 5p; + 2p;). (a) What are firm...
The table below is the payoff marrix for a simple two-firm game Firms A and B are bidding on a government contract and each f's bid is not known by the other form. Each firm can bid other $14.000 or 55.000 The cost of completing the project for each firm is 53.000 The low bid firm will win the contractat its stated price the high dem wilgot nothing the two bids are equal, the two firms wil split the price...
Question 43 10 pts (10 marks: 1 mark each) Use the following payoff matrix for a 2-firm oligopoly to answer the questions below Firm A: High Price Low Price A-1000 A-1250 High Price B = 1000 B = 300 Firm B: A-300 A = 700; Low Price B-1250 B-700 a. If the two firms above collude, the profits for each of the 2 firms would be: Firm A Profits Firm B Profits a. If the two firms above collude, the...
(10 marks: 1 mark each) Use the following payoff matrix for a 2-firm oligopoly to answer the questions below Firm A: High Price Low Price A = 1000: A = 1250; High Price B = 1000 B = 300 Firm B: A = 300; A = 700; Low Price B = 1250 B = 700 a. If the two firms above collude, the profits for each of the 2 firms would be: Firm A Profits Firm B Profits b. Suppose...
Consider the game represented by the payoff matrix below. Two firms are colluding and setting high 3. prices. Each of the firms can apply for leniency with the antitrust authority or stay silent If a firm applies for lenciency and becomes a whistleblower and the other firm does not, the whistleblower receives a reward of R. If both firms apply for lenciency and become whistleblowers, they receive half of the reward. If both firms stay silent, the the antitrust authority...
The payoff matrix below shows the payoffs (in millions of
dollars) for two firms, A and B, for two different strategies,
investing in new capital or not investing in new capital.
This game is an example of a:
Select one:
a. cartel.
b. credible promise.
c. prisoner's dilemma.
d. game with multiple equilibria.
Firm B Invest Not invest 20 for A 20 for B 70 for A Invest 5 for B Firm A 5 for A 50 for A Not...
consider the standard Bertrand model of price competition. There
are two firms that produce a homogenous good with the same constant
marginal cost of c.
a) Suppose that the rule for splitting up cunsumers when the
prices are equal assigns all consumers to firm1 when both firms
charge the same price. show that (p1,p2) =(c,c) is a Nash
equilibrium and that no other pair of prices is a Nash
equilibrium.
b) Now, we assume that the Bertrand game in part...
options are:
b) small, large
The table below shows the payoff matrix for a game between Toyota and Honda, each of which is contemplating building a factory in a new market Each firm can other build a small factory (and produce a small number of cars) or build a large factory (and produce a large number of cars). Suppose no other car manufacturers are selling in this market Toyota's Decision Small Factory Large Factory High Industry Price Medium Industry Price...
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