10. Refer to the payoff matrix below. Which outcome reflects the dominant strategy?University SubsRuns a 2-for-1promotionKeeps price highMakesLoses$1,000$5,000Runs a 2-for-1promotionMakesMakes$1,000$15,000SavorySandwichesMakes$15,000Makes$10,000|Keeps price highLoses$5,000Makes$10,000A. top leftB. top rightC. bottom leftD. bottom right

The dominant strategy is a term used in game theory to describe a situation in which one player has…

10. Refer to the payoff matrix below. Which outcome reflects the dominant strategy? University Subs Runs a 2-for-1 promotion Keeps price high Makes Loses $1,000 $5,000 Runs a 2-for-1 promotion Makes $15,000 Makes $1,000 Savory Sandwiches Makes $15,000 Makes $10,000 Keeps price high Makes $10,000 Loses $5,000 A. top left B. top right C. bottom left D. bottom right

10. Refer to the payoff matrix below. Which outcome reflects the dominant strategy? University Subs Runs a 2-for-1 promotion Keeps price high Makes Loses $1,000 $5,000 Runs a 2-for-1 promotion Makes $15,000 Makes $1,000 Savory Sandwiches Makes $15,000 Makes $10,000 Keeps price high Makes $10,000 Loses $5,000 A. top left B. top right C. bottom left D. bottom right

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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12. An important characteristic of a dominant strategy is that: Select one: a. it is the best strategy to dominate your opponents b. it always leads to a Nash equilibrium where all players equally well off c. it can prevent the game reaching a Nash equilibrium d. it is the best strategy for a player, regardless of whatever strategy the opponent chooses
a. b. Each firm has four alternative strategies, and a certain profit/payoff is associated with each strategy. The numbers in the payoff matrix denote firm A's profit (in thousands of dollars). The total amount of profit that can be earned by the two firms together is $20000. (This is called a "constant sum game.") Firm B's profit is therefore $20000 minus firm A's profit. What strategies will the two firms select? Is the game strictly determined? If so, how much does each firm gain? B's strategies A's strategies ↓ Increase Advertising Decrease Price Increase Price Alter Product Increase Advertising 0 11 8 11 Decrease Price 8 10 6 2 Increase Price 7 12 15 Alter Product 4 15 3 12 Suppose now that due to a change in consumer preferences, firm A's "Increase Price" strategy pays off better than before when firm B elects to "Decrease Price," that is, the payoff rises from 6 to 14. What strategies will the two firms now select? Is the game strictly determined? If so, how much does each firm…
9. Little Kona is a small coffee company that is consider- ing entering a market dominated by Big Brew. Each company's profit depends on whether Little Kona enters and whether Big Brew sets a high price or a low price: Little Kona Enter Don't Enter High Price Kona makes $2 million Kona makes zero Big Brew Brew makes $3 million Brew makes $7 million Kona loses $1 million Low Price Kona makes zero Brew makes $1 million Brew makes $2 million
1. Consider the following game matrix. Player A Answer: Top Bottom Left a, b e, f Player B Right c, d g, h (a) If top and left are strictly dominant strategies, then what do we know the relationship of the parameters? (b) If (top, left) is a Nash equilibrium, then what do we know the relationship of the parameters? Answer: (c) If top and left are strictly dominant strategies, will (top, left) be a Nash equilibrium? Why? Answer: (d) If (top, left) is a Nash equilibrium, must the strategies be strictly dominant strategies? Why? Answer:
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