(a) if Shell knows Chevron will choose the LE, 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] V (d) If Chevron knows Shell will choose the HIGH PRICE, what price should Chevron choose? [Select] V

(a) if Shell knows Chevron will choose the LE, 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] V (d) If Chevron knows Shell will choose the HIGH PRICE, what price should Chevron choose? [Select] V

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Current Attempt in Progress When the consumer has limited buying options from a company, the company utilizes which of Porter's Five Competitive Forces? O Potential threat of new entrants O Bargaining power of suppliers O Bargaining power of buyers O Threat of substitute products O Industry competitors
g, h and I
Q² 4 PROBLEM (4) Firm A and Firm B with identical total costs TCA (QA) related goods and competing in prices (Bertrand competition), with demands: QA = 510 - 2PA + pв and Qв= 510 - 2pв+ pa, respectively. = and TCB (QB) Q² 4 are producing (a) Calculate the Bertrand-Nash equilibrium prices. (b) Calculate the prices they charge when A is the leader and sets its price first, anticipating B's best response and taking it into account (like in Stackelberg competition). (c) Calculate the prices they charge when they collude, in order to maximize sum of their profits.
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3. Firm A and Firm B are two firms in an industry. Firm A and Firm B are planning to merge. (a) Firm A and Firm B are Bertrand duopolists with identical and constant marginal costs. Post-merger marginal cost is lower than pre-merger. Use a figure that includes a downward-sloping linear market demand to show how the merger of Firm A and Firm B will lead to anticompetitive losses as well as cost-savings. (b) Firm A and Firm B are Cournot duopolists with identical marginal costs. Post- merger marginal cost is the same as pre-merger. Use a figure that includes a downward-sloping linear market demand to show how the merger of Firm A and Firm B will lead to anticompetitive losses. (c) Firm A and Firm B are Stackelberg competitors with identical marginal costs. Post-merger marginal cost is the same as pre-merger. Firm A is the Stackelberg leader. Use a figure that includes a downward-sloping linear market demand to show how the merger of Firm A and Firm B will lead to anticompetitive losses.…
3. Consider a duopoly market, where two firms sell differentiated prod- ucts, which are imperfect substitutes. The market can be modelled as a static price competition game, similar to a linear city model. The two firms choose prices pi and p2 simultaneously. The derived demand functions for the two firms are: D, (P1, P2) = + P2-P1 and D2 (P1, P2) =+ 2, where S > 0 and the parameter t > 0 measures the degree of product differentiation. Both firms have constant marginal cost c > 0 for production. S 2t S %3D 2
6. Consider a duopoly in which inverse demand is given by P= 100-Q, where Pis the price and Q is aggregate output. The marginal cost of each firm is initially equal to 55 and there are no fixed costs. The firms compete by simultaneously setting quantities. (a) What is the equilibrium quantity of each firm, the equilibrium price and the profit of each firm? Now assume that one of the firms, firm 1, develops a new technology that reduces its own marginal cost to 25. (b) If firm 1 keeps this innovation for itself (so that the marginal cost of firm 2 is still 55), what will be the new equilibrium levels of output, price and profits of the two firms? What is the consumer surplus in the market? Do consumers benefit from the innovation?
Which of the following might be sufficiently credible threats so as to prevent a challenger from entering a market? Question 6Answer a. The incumbent firm builds a very large factory with a lot of extra capacity b. The incumbent firm has exclusive contracts with all of its suppliers c. The incumbent firm engages in ubiquitous advertising d. All of the answers are correct
You are one of two identical firms producing homogeneous good. (a) If you have an option of announcing your output first (before your rival does so), would it be an advantage for you? [yes there is an advantage, no there is no advantage] (b) What if you have an option of announcing your price first? [yes there is an advantage, no there is no advantage]
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.