1. Two soap producers, the Fortnum Company and the Maison Company, canstress either newspapers or magazines in their forthcoming advertising cam-paigns. The payoff matrix is as follows:Maison CompanyStress newspapersStress magazinesStressnewspapers$8 mm, $9 mm$7 mm, $8 mmFortnumCompanyStressmagazines$9 mm, $8 mm$8 mm, $7 mm.a. Is there a dominant strategy for each firm? If so, what is it?b. What will be the profit of each firm?c. Is this game an example of the prisoner's dilemma?

(a) For Fortnum company: 1. If the Maison company stresses newspapers and:Fortnum chooses…

Answered: 1. Two soap producers, the Fortnum…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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please do the questions and the chocies for the last question is (high, low) thankyou!!
The payoff matrix in the figure to the right shows the payoffs for a pricing game. If you were firm A, which strategy would you choose? Firm A should A. price high because this is their maximin strategy. B. price low because this is their tit-for-tat strategy. C. price high because this is their dominant strategy. D. price low because this is their dominant strategy. E. price low because this maximizes profits of both firms. Firm B's dominant strategy is to price If this game were repeated a large number of times and you were firm A and you could change your strategy, what might you do? Firm A should O A. use a tit-for-tat strategy by responding in kind to firm B's play. B. use a maximin strategy by maximizing the minimum gain that can be earned. C. use a tit-for-tat strategy by selecting a price that minimizes firm B's profits. D. use a maximin strategy by by responding in kind to firm B's play. E. use a tit-for-tat strategy by maximizing the minimum gain that can be earned. C Price…
Exercise A.2 . Sinergy and Dinaco are the only two companies in a high-tech industry. They are faced with the following matrix of results when deciding their research budget: After analizing the graph, answer the following questions... a) Does Sinergy have a dominant strategy? Reason your answer. b) Does Dinaco have a dominant strategy? Reason your answer. c) Is there a Nash equilibrium in this scenario? Reason your answer.
Consider the payoff matrix below representing two firms engaged in Bertrand Competition. Firm A is player 1 and Firm B is player 2. High price Low price High price 10, 12 -1, 13 Low price 12, 2 0, 3 What is Firm A's dominant strategy? Question 14Answer a. High price b. Low price c. Firm A does not have a dominant strategy
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Consider the payoff matrix below representing two firms engaged in Bertrand Competition. Firm A is player 1 and Firm B is player 2. High price Low price High price 10, 12 -1, 13 Low price 12, 2 0, 3 What is Firm A's dominant strategy? Question 14Answer a. High price b. Low price c. Firm A does not have a dominant strategy
Please no written by hand solution Suppose two firms compete in quantities (Cournot). Market demand is given by P = 260 − 2Q, where Q = q1 + q2. Both firms have constant MC = AT C = 20.a. Solve for the Cournot equilibrium and find the Cournot equilibrium profits for each firm.b. Now suppose the two firms formed a cartel. What would be the profits for each firm then?c. If firm 2 sticks to the cartel agreement (quantity), then what is the best response for firm 1 (if firm 1 were to deviate)? Find the profits for firm 1 from deviating.d. How large must the probability-adjusted discount factor be in order for the cartel to be stable?e. How would the answer to part d. change if the two firms were competing in prices (Bertrand)?Please answer all steps, because no too much detailed answers required.
Consider two cigarette companies, PM Inc. and Brown Inc. If neither company advertises, the two companies split the market. If they both advertise, they again split the market, but profits are lower, since each company must bear the cost of advertising. Yet if one company advertises while the other does not, the one that advertises attracts customers from the other. Refer to Scenario 17-3. What is PM Inc.'s dominant strategy? to advertise only if Brown Inc. does not advertise to refrain from advertising, regardless of whether Brown Inc. advertises to advertise, regardless of whether Brown Inc. advertises to advertise only if Brown Inc. advertises
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5. To advertise or not to advertise Suppose that Creamland and Dairy King are the only two firms that sell ice cream. The following payoff matrix shows the profit (in millions of dollars) each company will earn depending on whether or not it advertises: Dairy King Advertise Doesn't Advertise Advertise 8, 8 15, 2 Creamland Doesn't Advertise 2, 15 11, 11 For example, the upper right cell shows that if Creamland advertises and Dairy King doesn't advertise, Creamland will make a profit of $15 million, and Dairy King will make a profit of $2 million. Assume this is a simultaneous game and that Creamland and Dairy King are both profit-maximizing firms. If Creamland decides to advertise, it will earn a profit of $ million if Dairy King advertises and a profit of $ million if Dairy King does not advertise. If Creamland decides not to advertise, it will earn a profit of $ million if Dairy King advertises and a profit of $ million if Dairy King does not advertise. If Dairy King advertises,…
To advertise or not to advertise Suppose that Creamland and Dairy King are the only two firms that sell ice cream. The following payoff matrix shows the profit (in millions of dollars) each company will earn depending on whether or not it advertises: Dairy King Advertise Doesn't Advertise Creamland Advertise 10, 10 18, 2 Doesn't Advertise 2, 18 11, 11 For example, the upper right cell shows that if Creamland advertises and Dairy King doesn't advertise, Creamland will make a profit of $18 million, and Dairy King will make a profit of $2 million. Assume this is a simultaneous game and that Creamland and Dairy King are both profit-maximizing firms. If Creamland decides to advertise, it will earn a profit of _________ million if Dairy King advertises and a profit of ________ million if Dairy King does not advertise. If Creamland decides not to advertise, it will earn a profit of __________ million if Dairy King advertises and a profit of _________…
Deviating from the collusive outcome Please check the image there is a graph Mays and McCovey are beer-brewing companies that operate in a duopoly (two-firm oligopoly). The daily marginal cost (MC) of producing a can of beer is constant and equals $0.60 per can. Assume that neither firm had any startup costs, so marginal cost equals average total cost (ATC) for each firm. Suppose that Mays and McCovey form a cartel, and the firms divide the output evenly. (Note: This is only for convenience; nothing in this model requires that the two companies must equally share the output.) Place the black point (plus symbol) on the following graph to indicate the profit-maximizing price and combined quantity of output if Mays and McCovey choose to work together. When they act as a profit-maximizing cartel, each company will produce cans $ and charge $ per can. Given this information, each firm earns a daily profit of $ , so the daily total industry…

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