2. China Eastern Airlines (MU) and Air China (CA) are two domestic carriers operating the route between Beijing and Shanghai. MU intends to initiate a discount on the ticket price from 1000 RMB to 800 RMB, in order to increase the sales in Spring Festival Holiday. Meanwhile, MU is informed that CA would do the same. Both MU and CA have two options, either reduce the price or keep the original price, resulting in four outcomes marked from 1. to 4. in Table 1. The payoffs at each outcome are also provided in Table 2 for MU and CA. Each player prefers the outcome with higher payoffs. Please find out which one of the four outcomes is most likely to happen by giving detailed steps for calculation. Table 2 Options and Payoffs for MU and CA СА Original Price 1. (30, 60) 3. (60, 90) Discount 2. (-70, 80) MU Original Price Discount 4. (-10,-10)

2. China Eastern Airlines (MU) and Air China (CA) are two domestic carriers operating the route between Beijing and Shanghai. MU intends to initiate a discount on the ticket price from 1000 RMB to 800 RMB, in order to increase the sales in Spring Festival Holiday. Meanwhile, MU is informed that CA would do the same. Both MU and CA have two options, either reduce the price or keep the original price, resulting in four outcomes marked from 1. to 4. in Table 1. The payoffs at each outcome are also provided in Table 2 for MU and CA. Each player prefers the outcome with higher payoffs. Please find out which one of the four outcomes is most likely to happen by giving detailed steps for calculation. Table 2 Options and Payoffs for MU and CA СА Original Price 1. (30, 60) 3. (60, 90) Discount 2. (-70, 80) MU Original Price Discount 4. (-10,-10)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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