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2. (17) Bob and Joe both own convenience marts on opposite corners. Both firms are considering expanding the size their stores. The payoff matrix for this decision is shown below. Does Bob's Mart have a dominant strategy? Explain why or why not. Expand Bob's Mart Strategy Joe's Expand Mart Strategy Don't Expand Bob's profit $-1,000 Joe's profit=$-1,000 Bob's profit $10,000 Joe's profit=$-2,000 Don't Expand Bob's profit $-2,000 Joe's profit $10,000 Bob's profit $15,000 Joe's profit=$5,000 = 3.Suppose that an industry contains only four firms. The table below shows the market share of each firm in the market. Percentage Share of: Firm A 25 Firm B 30 Firm C 15 Firm D 30 (16) Calculate the Herfindahl-Hirschman index for the industry. In which category would regulators consider this industry base on the index?

2. (17) Bob and Joe both own convenience marts on opposite corners. Both firms are considering expanding the size their stores. The payoff matrix for this decision is shown below. Does Bob's Mart have a dominant strategy? Explain why or why not. Expand Bob's Mart Strategy Joe's Expand Mart Strategy Don't Expand Bob's profit $-1,000 Joe's profit=$-1,000 Bob's profit $10,000 Joe's profit=$-2,000 Don't Expand Bob's profit $-2,000 Joe's profit $10,000 Bob's profit $15,000 Joe's profit=$5,000 = 3.Suppose that an industry contains only four firms. The table below shows the market share of each firm in the market. Percentage Share of: Firm A 25 Firm B 30 Firm C 15 Firm D 30 (16) Calculate the Herfindahl-Hirschman index for the industry. In which category would regulators consider this industry base on the index?

Principles of Microeconomics (MindTap Course List)
Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN:9781305971493
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter17: Oligopoly
Section: Chapter Questions
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2. (17) Bob and Joe both own convenience marts on opposite corners. Both firms are considering expanding the size their stores. The payoff matrix for this decision is shown below. Does Bob's Mart have a dominant strategy? Explain why or why not. Expand Bob's Mart Strategy Joe's Expand Mart Strategy Don't Expand Bob's profit $-1,000 Joe's profit=$-1,000 Bob's profit $10,000 Joe's profit=$-2,000 Don't Expand Bob's profit $-2,000 Joe's profit $10,000 Bob's profit $15,000 Joe's profit=$5,000 = 3.Suppose that an industry contains only four firms. The table below shows the market share of each firm in the market. Percentage Share of: Firm A 25 Firm B 30 Firm C 15 Firm D 30 (16) Calculate the Herfindahl-Hirschman index for the industry. In which category would regulators consider this industry base on the index?
Transcribed Image Text:2. (17) Bob and Joe both own convenience marts on opposite corners. Both firms are considering expanding the size their stores. The payoff matrix for this decision is shown below. Does Bob's Mart have a dominant strategy? Explain why or why not. Expand Bob's Mart Strategy Joe's Expand Mart Strategy Don't Expand Bob's profit $-1,000 Joe's profit=$-1,000 Bob's profit $10,000 Joe's profit=$-2,000 Don't Expand Bob's profit $-2,000 Joe's profit $10,000 Bob's profit $15,000 Joe's profit=$5,000 = 3.Suppose that an industry contains only four firms. The table below shows the market share of each firm in the market. Percentage Share of: Firm A 25 Firm B 30 Firm C 15 Firm D 30 (16) Calculate the Herfindahl-Hirschman index for the industry. In which category would regulators consider this industry base on the index?
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