Dairy KingAdvertise Doesn't AdvertiseAdvertise7,712, 3CreamlandDoesn't Advertise3, 1210, 10For example, the upper right cell shows that if Creamland advertises and Dairy King doesn't advertise, Creamland will make a profit of $12 million,and Dairy King will make a profit of $3 million. Assume this is a simultaneous game and that Creamland and Dairy King are both profit-maximizingfirms.If Creamland decides to advertise, it will earn a profit ofnot advertise.million if Dairy King advertises and a profit ofmillion if Dairy King doesIf Creamland decides not to advertise, it will earn a profit ofdoes not advertise.million if Dairy King advertises and a profit ofmillion if Dairy KingIf Dairy King advertises, Creamland makes a higher profit if it choosesIf Dairy King doesn't advertise, Creamland makes a higher profit if it choosesSuppose that both firms start off not advertising. If the firms act independently, what strategies will they end up choosing?◇ Creamland will choose to advertise and Dairy King will choose not to advertise.Both firms will choose not to advertise.Creamland will choose not to advertise and Dairy King will choose to advertise.Both firms will choose to advertise.Again, suppose that both firms start off not advertising. If the firms decide to collude, what strategies will they end up choosing?Creamland will choose to advertise and Dairy King will choose not to advertise.Both firms will choose to advertise.Both firms will choose not to advertise.Creamland will choose not to advertise and Dairy King will choose to advertise.

The market structure with two sellers and more buyers is said too be duopoly market. The price and…

Advertise Doesn't Advertise Advertise Creamland 7,7 Doesn't Advertise 3,12 12,3 10, 10 For example, the upper right cell shows that if Creamland advertises and Dairy King doesn't advertise, Creamland will make a profit of $12 million, and Dairy King will make a profit of $3 million. Assume this is a simultaneous game and that Creamland and Dairy King are both profit-maximizing firms. not If Creamland decides to advertise, it will earn a profit of $ advertise. million if Dairy King advertises and a profit of $ million if Dairy King does If Creamland decides not to advertise, it will earn a profit of 5 does not advertise. million if Dairy King advertises and a profit of [S million if Dairy King If Dairy King advertises, Creamland makes a higher profit if it chooses

Advertise Doesn't Advertise Advertise Creamland 7,7 Doesn't Advertise 3,12 12,3 10, 10 For example, the upper right cell shows that if Creamland advertises and Dairy King doesn't advertise, Creamland will make a profit of $12 million, and Dairy King will make a profit of $3 million. Assume this is a simultaneous game and that Creamland and Dairy King are both profit-maximizing firms. not If Creamland decides to advertise, it will earn a profit of $ advertise. million if Dairy King advertises and a profit of $ million if Dairy King does If Creamland decides not to advertise, it will earn a profit of 5 does not advertise. million if Dairy King advertises and a profit of [S million if Dairy King If Dairy King advertises, Creamland makes a higher profit if it chooses

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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3. The following is an interpretation of the rivalry between the United States (USA) and the Soviet Ünion (USSR) during the cold war. Each side has the choice of two strategies: Aggressive and Restrained. The payoff table is given as follows: USSR Restrained Aggressiveness Restrained 4,3 1,4 USA Aggressiveness 3,1 2,2 a) Consider this game when the two countries move simultaneously. Find all pure strategy Nash equilibria. b) Next consider three alternative ways in which the game could be played with sequential moves: (i) The USA moves first and the USSR moves second. (i) the USSR moves first and the USA moves second. (i) The USSR moves first, and the USA moves second, but the USSR has a further move after the USA moves. For each case, draw the game tree and find the subgame-perfect Nash equilibrium. c) What are the key strategic issues (commitment, credibility and so on) for the two countries. (Note: Be concise. Your answer should not exceed 300 words].
Consider the following information for a static game. If you advertise and your rival advertises, you each will earn $5 million in profits. If you choose not to advertise and your rival chooses not to advertise, you will each earn $10 million in profits. However, if one of you advertises and the other does not, the firm that advertises will earn $15 million and the firm that does not advertise will earn $1 million. Assuming that each player cares only about his or her own profits, the Nash equilibrium is? Explain your answer in three long paragraphs (intro body and conclusion)
aepioymentld=598281800483229979995799&elSBN=9780357133606&id%3D1061548135&snapshotld%32200166& 6. Using a payoff matrix to determine the equilibrium outcome Suppose there are only two firms that sell smartphones: Flashfone and Pictech. The following payoff matrix shows the profit (in millions of dollars) each company will earn, depending on whether it sets a high or low price for its phones. Pictech Pricing High Low High 11, 11 2, 15 Flashfone Pricing Low 15, 2 8, 8 For example, the lower-left cell shows that if Flashfone prices low and Pictech prices high, Flashfone will earn a profit of $15 million, and Pictech will earn a profit of $2 million. Assume this is a simultaneous game and that Flashfone and Pictech are both profit-maximizing firms. If Flashfone prices high, Pictech will make more profit if it chooses a price, and if Flashfone prices low, Pictech will make more profit if it chooses ▼ price. a If Pictech prices high, Flashfone will make more profit if it chooses a price, and…
O Cell A O Cell C O Cell E O Cell I None of the above
8.8
Part 1 Sam and Ray do not like each other and will be miserable if they attend the same event. Both are going out Friday night to either the bar or a concert; and Sam will publicly tweet where he is going before Ray makes his plans. Each will get 6 payoff from going to a concert and 2 benefit from going to the bar if the other is not there. If both go to the same venue, they will get a payoff of zero. Write a game tree for this game and find the equilibrium strategy and equilibrium payoffs clearly labeling both. Part 2 Take the game from the question above and switch the order of the decisions. Write a game tree for this game and find the equilibrium strategy and equilibrium payoffs clearly labeling both. Has the equilibrium strategies and payoffs changed from the question above? Explain why.
To advertise or not to advertise Suppose that Creamland and Dairy King are the only two firms that sell ice cream. The following payoff matrix shows the profit (in millions of dollars) each company will earn depending on whether or not it advertises: Dairy King Advertise Doesn't Advertise Creamland Advertise 10, 10 18, 2 Doesn't Advertise 2, 18 11, 11 For example, the upper right cell shows that if Creamland advertises and Dairy King doesn't advertise, Creamland will make a profit of $18 million, and Dairy King will make a profit of $2 million. Assume this is a simultaneous game and that Creamland and Dairy King are both profit-maximizing firms. If Creamland decides to advertise, it will earn a profit of _________ million if Dairy King advertises and a profit of ________ million if Dairy King does not advertise. If Creamland decides not to advertise, it will earn a profit of __________ million if Dairy King advertises and a profit of _________…
1.9. What is a mixed strategy in a normal-form game? What is a mixed-strategy Nash equilibrium in a normal-form game?
Speedy Bike's Advertising Power Bike's Advertising Budget Large Budget Small Large Small A $20 B $18 $20 с $35 $18 $35 D $25 $25 Refer to the payoff matrix. Suppose that Speedy Bike and Power Bike are the only two bicycle manufacturing firms serving the market. Both can choose large or small advertising budgets. If this is a one-time, simultaneous game, which cell represents the final outcome we would expect to occur?
In a small town there are two pizza restaurants . If neither restaurant advertises, its revenue will not change. If only one firm advertises, the firm that advertises will double its revenue and the firm that doesn't advertise will see a decrease in its revenue, but if both firms advertise, their revenue will not change. What outcome would be predicted by game theory in this market? Both restaurants will advertise. Game theory would predict chat sometimes one restaurant would advertise, and the rest of the time both will advertise. Neither restaurant will advertise Game theory is only a theory and cannot predict real-world events. One restaurant will advertise.
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