Homework Answers
Question 7
Dominant strategy is evident for Firm 1 only.
This is because Firm 1 will always choose High price as the payoffs are better no matter what Firm 2 chooses. That is: 2 is better than 0 and 6 is better than 5.
The Firm 2 has no dominant strategy.
Question 8
Answer: Firm 1 prices high, Firm 2 prices high
It is very obvious that Firm 1 will play the dominant strategy of pricing high. Thus, Firm 2 will be able to maximise profits ($6) when it also prices high. It will be a Nash Equilibrium.
Question 9
Firm 1 and Firm 2 randomize
With the given changes, none of the firms will have a dominant strategy. Also, there will be no pure strategy Nash Equilibrium. The firms will have to randomise and find a Mixed Strategy Nash Equilibrium.
Add Answer to:
X fx alue Response (click on correct answer) Firm 1 Low Price High Price Low Price...
Firm B Low Price High Price Low Price 100, 100 600,50 High Price 50, 600 500,...
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
2. Suppos e there are two firms in an oligopoly, Firm A both firms charge a...
2. Suppos e there are two firms in an oligopoly, Firm A both firms charge a low price, each earns and Firm B. If $2 million in profit. If both firms charge a high price, each earns $3 million in profit. If one firm charges a high price and one charges a low price, customers flock to the firm with the low price, and that firm earns $4 million in profit while the firm with the high price earns $1...
BBlank answer choices: 1. (High, Low ) 2. (High, Low) 3. (High, Low) 4. (High, Low) 5. (Is, Is not) 6. Using a payoff ma...
BBlank answer choices:
1. (High, Low )
2. (High, Low)
3. (High, Low)
4. (High, Low)
5. (Is, Is not)
6. Using a payoff matrix to determine the equilibrium outcome Suppose there are only two firms that sell smartphones: Flashfone and Pictech. The following payoff matrix shows the profit (in millions of dollars) each company will earn, depending on whether it sets a high or low price for its phones. Pictech Pricing High Low Flashfone Pricing High Low 11, 113,...
) Use the table below to answer the following questions. Table 2 Table 2 gives the...
) Use the table below to answer the following
questions.
Table 2
Table 2 gives the payoff matrix in terms of economic profit for
firms A and B when there are two strategies facing each firm: (1)
charge a low price, or (2) charge a high price.
a) why the equilibrium in this game (played once) is a dominant
strategy equilibrium ?
b) In Nash equilibrium, what the economic profit firm A makes
?
c) If both firms could successfully...
Drop Down Menu Options: 1) high/low 2) high/low 3) high/low 4) high/low 5) is/is not 6....
Drop Down Menu Options:
1) high/low
2) high/low
3) high/low
4) high/low
5) is/is not
6. Using a payoff matrix to determine the equilibrium outcome Suppose there are only two firms that sell smartphones: Flashfone and Pictech. The following payoff matrix shows the profit (in millions of dollars) each company will earn, depending on whether it sets a high or low price for its phones. Pictech Pricing High 10, 10 16,5 High Low Low 5,16 7,7 Flashfone Pricing For example,...
5. Suppose two firms A and B must decide whether to charge low or high price...
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...
11. The demand for a monopolist's product is given by Q-400 4P while the monopolist's marginal...
11. The demand for a monopolist's product is given by Q-400 4P while the monopolist's marginal cost is given by MC- Q The profit-maximizing quantity of output for this monopolist is A) 1o0 B) 44-44 D) 20 There is a payoff matrix of two firms; their different profits are listed when they choose collusion or competition (answer 14-15). firm B competition 4.14 5. 28 collusion 27,5 19, 19 firm A competition collusion 12. In the game above, who has dominant...
11. The demand for a monopolist's product is given by Q - 400 4P while the...
11. The demand for a monopolist's product is given by Q - 400 4P while the monopolist's marginal cost is given by MC-2Q The profit-maximizing quantity of output for this monopolist is A) 100 C) 40 B) 44-44 D) 20 There is a payoff matrix of two firms; their different profits are listed when they choose collusion or competition (answer 14-15). firm B collusion 27.5 19, 19 competition competition14, 14 5. 28 firm A collusion 12. In the game above,...
. The demand for a monopolist's product is given by Q monopolist's marginal cost is given...
. The demand for a monopolist's product is given by Q monopolist's marginal cost is given by MC -3 The profis-ma quantity of quantity output for this monopolist is A) 10o C) 40 8) 4444 D) a0 There is a payoff matrix of two flems: their collusion or competition (answer 14-15) differens profits are listed when they choose firm B competition firm A competition! 14.14 27.5 collusion 5. a8 9.19 2. In the game above, who has dominant strategy A)...
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
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...
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
2. Suppos e there are two firms in an oligopoly, Firm A both firms charge a low price, each earns and Firm B. If $2 million in profit. If both firms charge a high price, each earns $3 million in profit. If one firm charges a high price and one charges a low price, customers flock to the firm with the low price, and that firm earns $4 million in profit while the firm with the high price earns $1...
BBlank answer choices:
1. (High, Low )
2. (High, Low)
3. (High, Low)
4. (High, Low)
5. (Is, Is not)
6. Using a payoff matrix to determine the equilibrium outcome Suppose there are only two firms that sell smartphones: Flashfone and Pictech. The following payoff matrix shows the profit (in millions of dollars) each company will earn, depending on whether it sets a high or low price for its phones. Pictech Pricing High Low Flashfone Pricing High Low 11, 113,...
) Use the table below to answer the following
questions.
Table 2
Table 2 gives the payoff matrix in terms of economic profit for
firms A and B when there are two strategies facing each firm: (1)
charge a low price, or (2) charge a high price.
a) why the equilibrium in this game (played once) is a dominant
strategy equilibrium ?
b) In Nash equilibrium, what the economic profit firm A makes
?
c) If both firms could successfully...
Drop Down Menu Options:
1) high/low
2) high/low
3) high/low
4) high/low
5) is/is not
6. Using a payoff matrix to determine the equilibrium outcome Suppose there are only two firms that sell smartphones: Flashfone and Pictech. The following payoff matrix shows the profit (in millions of dollars) each company will earn, depending on whether it sets a high or low price for its phones. Pictech Pricing High 10, 10 16,5 High Low Low 5,16 7,7 Flashfone Pricing For example,...
11. The demand for a monopolist's product is given by Q-400 4P while the monopolist's marginal cost is given by MC- Q The profit-maximizing quantity of output for this monopolist is A) 1o0 B) 44-44 D) 20 There is a payoff matrix of two firms; their different profits are listed when they choose collusion or competition (answer 14-15). firm B competition 4.14 5. 28 collusion 27,5 19, 19 firm A competition collusion 12. In the game above, who has dominant...
11. The demand for a monopolist's product is given by Q - 400 4P while the monopolist's marginal cost is given by MC-2Q The profit-maximizing quantity of output for this monopolist is A) 100 C) 40 B) 44-44 D) 20 There is a payoff matrix of two firms; their different profits are listed when they choose collusion or competition (answer 14-15). firm B collusion 27.5 19, 19 competition competition14, 14 5. 28 firm A collusion 12. In the game above,...
. The demand for a monopolist's product is given by Q monopolist's marginal cost is given by MC -3 The profis-ma quantity of quantity output for this monopolist is A) 10o C) 40 8) 4444 D) a0 There is a payoff matrix of two flems: their collusion or competition (answer 14-15) differens profits are listed when they choose firm B competition firm A competition! 14.14 27.5 collusion 5. a8 9.19 2. In the game above, who has dominant strategy A)...
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...
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