Firm YLow Price High PriceFirm XHigh Price Low PriceX = $625 X = $725Y = $625 Y = $475X = $475 X = $400Y = $725 Y = $400Answer the question based on the payoff matrix for a duopoly in which the numbers indicate the profit in thousands of dollars for a high-price or a low-price strategy. If this is a simultaneous game where the firms compete and seek thehighest possible profits, the most likely profit isMultiple ChoiceO$475,000 for firm X and $725,000 for firm Y.$400,000 for firm X and $400,000 for firm Y.$625,000 for firm X and $625,000 for firm Y.Help$725,000 for firm X and $475,000 for firm Y.

Answer the question based on the payoff matrix for a duopoly in which the numbers indicate the profit in thousands of dollars for a high-price or a low-price strategy. If this is a simultaneous game where the highest possible profits, the most likely profit is Multiple Choice

Answer the question based on the payoff matrix for a duopoly in which the numbers indicate the profit in thousands of dollars for a high-price or a low-price strategy. If this is a simultaneous game where the highest possible profits, the most likely profit is Multiple Choice

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Find the Nash Equilibria for each of the following 2x2 games (The left payoff value is associated…

A: The field of game theory influences numerous facets of contemporary socioeconomics, including…

Q: Intel and Applied Micro devices are the 2 major producers of CPU chips used in personal computers.…

A: Pure strategy Nash Equilibrium: Nash equilibrium with 2 players is the strategy profile where both…

Q: Boeing and Airbus, change in profits ($m) from the development of a super jumbo jet. Boeing Develop…

A: The selection of the best course of action in conflict situations is a topic covered by game theory.…

Q: Refer to the accompanying payoff matrix. Player 1 Low Q High Q Player 2 Low Q $50,$5 $40,$2 High Q…

A: It is a mathematical representation of all the possible outcomes of a strategic decision-making…

Q: Question 15 1 pts Consider a small town that has two grocery stores from which residents can choose…

A: The objective of this question is to identify the Nash Equilibrium in a price-setting game between…

Q: Rock-paper-scissors is a game in which players typically use mixed strategies. Can you think of…

A: The theory for conceiving social situations among the players that are competing and producing…

Q: Two identical firms each have a cost function TC = 2y2 and the market demand for their output is P =…

A: In an oligopoly, many of the market participants are only a few, relatively big companies, and hence…

Q: Suppose Proctor & Gamble (PG) and Johnson & Johnson (JNJ) are simultaneously considering new…

A: In game theory, a Nash equilibrium is a state in which no player, or participant, has any motivation…

Q: Consider a game where there is a dominant strategy equilibrium. You would then argue that, in…

A: A Nash equilibrium is a concept in game theory that represents a situation in which each participant…

Q: Intel and AMD are the two dominant producers of microchip processors. The following matrix gives the…

A: The Nash equilibrium is the optimal outcome of a game where no player has an incentive to deviate…

Q: Consider a first price sealed-bid auction of an object with two bidders. Each bidder i’s valuation…

A: In the first-price sealed bid, the value of one's bid not only determines whether he wins but also…

Q: Iterative Elimination of Dominated Strategies Exercise 4.2 Consider the following normal form of a…

A: The reduction of strictly dominating tactics throughout time (IESDS) One popular method for solving…

Q: Consider the game shown below. In this game, players 1 and 2 must move at the same time without…

A: In the mentioned question we have been asked the best payoff where both will get their best.

Q: Experiments suggest that subjects in centipede games would (A) always stop the game in the fifirst…

Q: Two firms are considering simultaneously developing a new product for a market. The costs of…

A: According to the question, the cost of developing product is $10m but the revenue of $40mwill be…

Q: Meeting Up: Two old friends plan to meet at a conference in San Francisco, and they agree to meet by…

A: Everything in today's society is influenced by game theory, from pricing strategies and efficacy to…

Q: You, a real-estate developer, own a piece of land in Nassau, Bahamas, next to an equal size piece of…

Q: Consider a game in which there is $4 to be divided, and the first mover is only permitted to make…

A: A game tree is used to illustrate a sequential game.Each node in the game tree represents the…

Q: Imagine two vendors (our players) who must simultaneously choose a location to position their…

A: Location game is the concept of the game theory where n number of players choose the location for…

Q: Economics - Game Theory & Business Strategy Inverse Market Demand for tires is P = 200 - .01Q We…

A: The extensive form of the game is, 1.Manufacturer sets Price X by solving: maxQ(100-0.01Q)Q-10Q 2.…

Q: Find all of the Nash equilibrium of the following three player game. Player 1 chooses rows (a,b).…

A: Player 1 Choose (a,b) Player 2 Choose (c,d) Player 3 Choose (x,y) x y c d c d a 5,5,5…

Q: Game theory can capture strategic situations where your outcome depends not only upon your own…

A: Nash equilibrium theory is a decision making theorem in which the players consider each other…

Q: Does this game have an iterated dominance equilibrium? Find the best responses of the players. Find…

A: In a Nash Equilibrium, each player’s strategy is optimal when considering the decisions of other…

Q: Suppose two players play a two-period repeated game, where the stage game is the normal-form game…

A: In a final subgame of the repeated game, players must play a Nash equilibrium in all subgame…

Q: Two individuals are bargaining over the distribution of $100 in which payoffs must be in increments…

Q: The strategies and payoffs are given in the table. The first number of each payoff pair in the…

A: The game theory is a branch of applied mathematics and economics. It studies how players interact…

Q: If a game does not have an equilibrium in pure strategies, then it will not have an equilibrium in…

A: Nash equilibrium in a game is a situation where there is no incentive to deviate from its chosen…

Q: Consider a location game with nine regions like the one discussed in this chapter. But instead of…

A: The term "marketing" describes the approach used by companies to advertise their products, draw in…

Q: Two firms compete by advertising. The profit matrix is given as follows:

A: Nash equilibrium is a state in which each participant in a game has chosen their best possible…

Q: Consider the two-stage, static game depicted in Figure 5.1 involving two companies that enter into…

A: Given game Firm Y A B C Firm X A (3,3) (1,1) (1,1) B (1,1) (5,5) (7,4) C…

Q: Consider a coordination game where each of two agents picks a number between 1 and 1000. The players…

A: Prize, of the number are same=$1000

Q: Answer the question based on the payoff matrix for a duopoly in which the numbers indicate the…

A: The pay-off matrix highlights the different choice combination that are availabe for the two…

Q: Which of the following is the COLLUSIVE OUTPUT in the Game Theory Matrix below? * Firm B Payoff =…

A: Collusion is a tacit agreement between competing firms in a market to avoid competition either by…

Q: Imagine two Pizzerias are playing a static game where the firms have to choose their strategies…

A: Nash equilibrium is the one in which each player is playing its best strategy, given the strategy of…

Q: Here is a payoff matrix that is interesting. I am not in an imaginative mood, so I won't try to tell…

A: When player 1 chooses row top, then player 2 has more payoff in choosing column right. And when…

Q: Three politicians are voting on whether to allow themselves a salary increase of$3,500per a year. If…

A: The Nash equilibrium allows us to view the outcome of a one-shot game when each player plays their…

Q: uppose that there are only two firms in a market in which demand is given by p = 64 - Q, where Q is…

A: A rational firm always aims to maximize its profit. The profit earned by a firm is the excess…

Q: An incumbent politician's cost of campaigning can be high or low and the entrant does not know this…

A: A pure-strategy Bayesian Nash Equilibrium (BNE) in a game with incomplete information is a strategy…

Q: 1. You have probably had the experience of trying to avoid encountering someone, whom we will call…

Q: Find the Nash equilibrium strategy and payoff in this simultaneous game. Show your work.

A: Nash equilibrium is that outcome where none of the players want to deviate or change their startegy…

Q: Player 1 is on the horizontal and Player 2 is on the vertical. Based on the following payoff matrix,…

A: The Nash equilibrium is a decision-making theorem within game theory that states a player can…

Q: Imagine that there are two snowboard manufacturers (FatSki and WideBoard) in the market. Each firm…

A: Disclaimer: Since you have posted a multi-part question, I am providing you with the answers to the…

Q: Question 3: Two cars roar at each other down the middle of a country road. Each driver has two…

A: The problem pose in this question is that of game theory where the two participants are two car…

Q: r to the accompanying game. Firm A Firm B Low Price High Price Low Price (10,9) (15,8) High…

A: Nash equilibrium occurs where a firm take best course of action provided the rival firm strategies…

Q: Each firm has four alternative strategies, and a certain profit/payoff is associated with each…

A: Given, Two Players : Firm A and Firm BFirm A has four strategies : Increase Advertising, Decrease…

Question

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Define a pay-off matrix for a duopoly

VIEW

Step 2: Find the profit levels in an simultaneous game

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Two discount stores (Megastore and Superstore) are interested in expanding their market share through advertising. The table below depicts the strategic outcomes (profits) of both stores with and without advertising. Superstore - Advertise Superstore - Don't Advertise Megastore - Advertise $95, $80 $305, $55 Megastore - Don't Advertise $65, $285 $165, $115 When the game does reach Nash Equilibrium, the payoffs for both stores will be a) Megastore $95 and Superstore $80 b) Megastore $305 and Superstore $55 c) Megastore $65 and Superstore $285 d) Megastore $165 and Superstore $115
Consider a Stackelberg game of quantity competition between two firms. Firm 1 is the leader and firm 2 is the follower. Market demand is described by the inverse demand function P=1000-4Q. Each firm has a constant unit cost of production equal to 20. Suppose firm 2's unit cost of production is c<20. What value would c have so that in the Nash Equilibrium, the two firms, the leader and the follower, had the same market share?
Consider the following 2-player normal form game. Player 2 Bananas Orange Player 1 Grapes 11, 3 8, 2 Apple 9, 7 6, 5 Player 1's dominant strategy is [Select ] and Player 2's dominant strategy is [ Select ) The Nash Equilibrium of this game is ( Select ) (select all that apply).
Once again, two ice cream truck vendors, A and B, are playing a simultaneous pricing game. If only one of the vendors prices low, he gets all the customers for a payoff of 12, while the other vendor gets no customers and a payoff of zero. If both vendors price high, they each get a payoff of 6. If both price low, they each get a payoff of 5. Suppose that the above game is repeated indefinitely, and together the vendors adopt a trigger strategy such that they would start charging the low price only if the other vendor charged a low price last time. Provided that the vendors stick to their new strategy, what would be the Nash equilibrium going forward? a) Both the vendors price high b) Both the vendors price low c) Vendor A prices high, vendor B prices low d) Vendor B prices high, vendor A prices low
Refer to the normal-form game of price competition in the payoff matrix below Firm B Low Price High Price Firm A Low Price 0, 0 50, −10 High Price −10, 50 20, 20 Suppose the game is infinitely repeated, and the interest rate is 20 percent. Both firms agree to charge a high price, provided no player has charged a low price in the past. This collusive outcome will be implemented with a trigger strategy that states that if any firm cheats, then the agreement is no longer valid, and each firm may make independent decisions. Will the trigger strategy be effective in implementing the collusive agreement? Please explain and show all necessary calculations.
Problem 2. Consider the partnership-game we discussed in Lecture 3 (pages 81-87 of the textbook). Now change the setup of the game so that player 1 chooses x = [0, 4], and after observing the choice of x, player 2 chooses y ≤ [0, 4]. The payoffs are the same as before. (a) Find all SPNE (subgame perfect Nash equilibria) in pure strategies. (b) Can you find a Nash equilibrium, with player 1 choosing x = 1, that is not subgame perfect? Explain.
Candie's Chocolates and Kara's Confections are competing candy stores. Both of them are thinking about opening a store in the town of Economicville. If Kara's opens a store in Economicville and Candie's determines that it is not profitable to also open a store, then Group of answer choices: a Nash equilibrium is not possible in this game. this is a zero-sum game. this is a simultaneous game. Kara's had a first-mover advantage in this game.
Finding Nash Equilibria Consider the following two player, normal form game: Player 1 Player 2 C L (2,1) U M (-2,-2) D R (2, -1) (1,2) (-1, 1) (0,0) (3,1) (0,0) (-1,-1) Find all pure and mixed strategy Nash equilibria. Calculate each player's expected payoffs at each equilibrium.
Consider the following three-stage duopoly game. There are two firms in the market: Firm 1 and Firm 2. In the first stage, a first-price auction is conducted to determine the order of moves. The firm with the highest bid (first mover) pays a cost equivalent to its bid and chooses its action in the second stage. After observing this action, the other firm (second mover) chooses its action in the third stage. When there is a tie in the first stage (both firms submit the same bid), a coin is tossed to determine the winner, and only the winner pays its bid. Each firm has the following three possible actions: small (expansion), medium (expansion) and large (expansion), and the payoffs they obtain in the market (not the final payoffs yet) are shown below: The second mover Small Medium Large 16, 12 Medium 18, 8 19, 7 13, 10 14, 11 Small 9, 9 10, 13 12, 10 The first mover Large 14, 12 The final payoff is equivalent to the payoff obtained in the market minus the cost (if any) paid in auction.…
Which of the following best describes Nash equilibrium? a) A situation where one player dominates the others b) A situation where each player's strategy is optimal given the strategies of the others c) A situation where all players cooperate perfectly d) A situation where players change strategies constantly
Consider a simultaneous move game with two players. Player 1 has three possible actions (A, B, or C) and Player 2 has two possible actions (D or E.) In the payoff matrix below, each cell contains the payoff for Player 1 followed by the payoff for Player 2. Identify any dominated strategies in this game. If there are none, state this clearly.
Consider a simultaneous game where player A has a dominant strategy and player B has two strategies (none of which is a dominant strategy). How many pure strategy Nash equilibria will this game have? A) Exactly 1 B) Exactly 2 C) Either 1 or 2 D) None