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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Give explanation of the correct option and the explanation of the incorrect options. No answer from Chat GPT
Suppose there is a duopoly of two identical firms, A and B, facing a market inversedemand of P = 110 − Q/4 , and cost functions of C_A = 10Q_A and C_B = 10Q_Brespectively.a. Plot the best response functions and find the Cournot-Nash equilibriumquantities, equilibrium price, and profits for each firm.b. Suppose that A acts as the leader in a Stackelberg model and B responds.What are the respective quantities and profits of each firm now? Is itadvantageous to move first?c. If the firms were able to collude, how much additional profit could they earnif they switch from simple monopoly pricing to perfect price discrimination?d. Graph and label the cartel outcome, the Cournot outcome and theStackelberg outcome on the inverse demand. Calculate the consumersurplus and deadweight loss in each case.
please do the questions and the chocies for the last question is (high, low) thankyou!!
6
Q5. A. Consider the following one period game between Yellow pages and a new competitor Spartan information. They earn revenues by charging businesses for their advertisement spaces. Their two strategies are: either charge a higher price (PH) or charge a lower price (PL) for advertising space. The payoffs from these strategies are provided for each firm. Is this a case of a prisoner's dilemma? Explain. Word limit: 100 words PH PL $20, $60 $40, $25 Рн $5, $70 PL $10, $45 Yellow Pages Spartan Info B. The local textile faces the faces the following supply curve for labor. Fill in the empty blanks. Wage rate per hour Units of labor Total Expenditure Marginal ($) supplied per hour Expenditure 4 10 40 NA 11 ? 12 ? ? 7 13 ? 8 14 ? ? The mill's demand curve for labor is a horizontal line at a wage of $17 per hour. How much labor will the mill demand? What will be the equilibrium wage rate?
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
COUNTRY B HIGH TARIFF LOW TARIFF HIGH TARIFF $1M $1 M $2M, $1.5 M COUNTRY A LOW $1.5 M, $ 2M $3м, $3 м TARIFF 1. What is the dominant strategy for: a. Country A b. Country B Is there an equilibrium dominant strategy for this game? 2. Find the Nash equilibrium a. Outcome = (High, high) b. Outcome = (High. Low) c. Outcome = (Low, high) d. Outcome = (Low, low) 3. What is the Maximin strategy for Country A and Country B? C.
Calculate the Herfindahl index for a duopoly market where each firm has equal market. Calculate the Herfindahl index for a three-firm oligopoly market in which one firm hasa 80% market share and the other firms each have 10% market share. iii. Calculate the Herfindahl index for a 10-firm oligopoly in which each firm has equal market shares. iv. Which of the above markets is the least competitive? Justify your position.
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.

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