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(a) If Shell knows Chevron will choose the HIGH PRICE, what price should Shell choose? [ Select ] (b) If Shell knows Chevron will choose the LOW PRICE, what price should Shell choose? [ Select ] (c) Does Shell have a dominant strategy? If so, what is it? [ Select ] (d) If Chevron knows Shell will choose the HIGH PRICE, what price should Chevron choose? [ Select ] (e) If Chevron knows Shell will choose the LOW PRICE, what price should Chevron choose? [ Select ] (f) Does Chevron have a dominant strategy? If so, what is it? [ Select ]

(a) If Shell knows Chevron will choose the HIGH PRICE, what price should Shell choose? [ Select ] (b) If Shell knows Chevron will choose the LOW PRICE, what price should Shell choose? [ Select ] (c) Does Shell have a dominant strategy? If so, what is it? [ Select ] (d) If Chevron knows Shell will choose the HIGH PRICE, what price should Chevron choose? [ Select ] (e) If Chevron knows Shell will choose the LOW PRICE, what price should Chevron choose? [ Select ] (f) Does Chevron have a dominant strategy? If so, what is it? [ Select ]

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Answer choices for a-f, 

a. High or low

b. High or low

c. Their dominant strategy is to choose the high price, low price, or they don't have a plan,

d. High or low

e. High or low

f. their dominant strategy is to choose the high price, low price, or they don't have a plan,

A small town has only two gas stations, Chevron and Shell. Daily, each station must simultaneously display their prices, choosing between a high price and low price. Assume both firms know their potential payoffs and this is a one-time game (both firms are only interested in today's profit). The payoff matrix for this game, showing potential daily profit, is displayed below. Chevron Decisions High Price Low Price S: $1,000 C: $8,000 S: $5,000 High Price C: $5,500 Shell Decisions S: $7,500 C: $1,500 S: $3,000 C: $2,800 Low Price
Transcribed Image Text:A small town has only two gas stations, Chevron and Shell. Daily, each station must simultaneously display their prices, choosing between a high price and low price. Assume both firms know their potential payoffs and this is a one-time game (both firms are only interested in today's profit). The payoff matrix for this game, showing potential daily profit, is displayed below. Chevron Decisions High Price Low Price S: $1,000 C: $8,000 S: $5,000 High Price C: $5,500 Shell Decisions S: $7,500 C: $1,500 S: $3,000 C: $2,800 Low Price
(a) If Shell knows Chevron will choose the HIGH PRICE, what price should Shell choose? [ Select ] (b) If Shell knows Chevron will choose the LOW PRICE, what price should Shell choose? [ Select ] (c) Does Shell have a dominant strategy? If so, what is it? [ Select ] (d) If Chevron knows Shell will choose the HIGH PRICE, what price should Chevron choose? [ Select ] (e) If Chevron knows Shell will choose the LOW PRICE, what price should Chevron choose? [ Select ] (f) Does Chevron have a dominant strategy? If so, what is it? [ Select ]
Transcribed Image Text:(a) If Shell knows Chevron will choose the HIGH PRICE, what price should Shell choose? [ Select ] (b) If Shell knows Chevron will choose the LOW PRICE, what price should Shell choose? [ Select ] (c) Does Shell have a dominant strategy? If so, what is it? [ Select ] (d) If Chevron knows Shell will choose the HIGH PRICE, what price should Chevron choose? [ Select ] (e) If Chevron knows Shell will choose the LOW PRICE, what price should Chevron choose? [ Select ] (f) Does Chevron have a dominant strategy? If so, what is it? [ Select ]
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