Brian and Matt own the only two bicycle repair shops in town. Each must choose between a low price for repair work and a high price. The yearly economic profits from each strategy are ndicated in Figure bellow. The upper right side of each rectangle shows Brian's profits; the lower eft side shows Matt's profits
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- Suppose Tasty Cakes is deciding its pricing strategy: it is debating whether to offer a single linear price for its sheet cakes or to offer non-linear pricing. Suppose on any day, it gets 2 customers–who are of Type A and TypeB with the following maximum willingness-to-pay for the cakes: Units Type A Type B 1 $100 $90 2 $75 $40 Suppose it costs $10 to bake each of the cakes. (a) If Tasty Cakes decides to pick a linear pricing strategy, what will be the profit-maximizing price it should choose? How many cakes will it end up selling and what will be its total profit? (b) If Tasty Cakes decides to pick a non-linear pricing strategy where it may offer a different price depending on the number of cakes purchased, what should be the profit-maximizing set of prices? How many cakes will it sell and what will be its total profit? (c)Comparing Tasty Cakes’profits in (a) and (b), explain IN WORDS why we see this difference in profitsThe above table shows the payoffs that either Darrin or Rob receive depending on whether they choose a high or a low price strategy. The predicted outcome is A. Darrin - Low Price; Rob - Low Price. B. Darrin - Low Price; Rob - High Price. C. Darrin - High Price; Rob - Low Price. D. Darrin - High Price; Rob - High Price.Consider a town in which only two residents, Eric and Ginny, own wells that produce water safe for drinking. Eric and Ginny can pump and sell as much water as they want at no cost. For them, total revenue equals profit. The following table shows the town's demand schedule for water. Note: the second picture of the last blank has 4 option A. nash equilibrium B tying c resale price maintenance D predatory pricing
- The Chicago Bears offer what are essentially two products: preseason and regular season football games. They play 2 preseason and 8 regular season home games. Suppose that Fred is a serious football fan. He values the preseason games at $140 each and the regular season games at $220 each. Joe is a more casual fan. He values the preseason games at $170 each and the regular season games at $180 each. Suppose that Fred and Joe are the only fans. If the Bears sell the tickets separately, the price of a ticket to a preseason game will be $ 140 The price of a ticket to a regular season game will be $ 180 Total revenue that the Chicago Bears collect will be $ 3440 If the Bears bundle tickets for the two preseason and eight regular season games together, the price the team will set for the bundle is S. Total revenue that the Chicago Bears collect will be S Should the Bears' managers sell the tickets separately or as a bundle? O A. The Bears should sell the tickets separately because they earn…2.19. Standard setting. Suppose Apple and Samsung are in the process of negotiating a common standard for a new 3D camera tech- nology they plan to introduce in the next generation of smartphones. Apple has a preference for standard A, whereas Samsung has a pref- erence for standard S. However, both recognize that multiple stan- dards are a worse outcome for all. Specifically, Apple gets 240 if it selects A and Samsung does so too, but only 20 if Samsung does not adopt A. If Apple adopts standard S and Samsung does so too, then Apple gets a payoff of 190. If, however, Samsung chooses A then Ap- ple gets zero. For Samsung, the situation looks similar: If Samsung chooses standard S and Apple does the same then Samsung gets 210, but if Apple chooses A the Samsung's payoff is only 30. If Samsung opts for standard A and Apple does so too then Samsung gets a pay- off of 110, whereas if Apple chooses standard S then Samsung gets a payoff of zero. (a) Suppose that both Apple and Samsung…Table A shows the pricing options for two drone operators, Andrew and Jasmine, as an oligopoly in a local market. Which of the following pricing strategy scenarios does Table 2 depict, when there are at least two pricing periods expected? Table A Drone Operator Jasmine LOW Price Drone Operator Jasmine HIGH Price Drone Operator Andrew LOW Price Andrew Low Jasmine Low Drone Operator Andrew Charges LOW Price: gets $1,000 profit Drone Operator Jasmine Charges LOW Price: gets $1,000 profit Drone Operator Andrew Charges LOW Price: gets $2,000 profit Drone Operator Jasmine Charges HIGH Price: gets $0 profit Table 2 Pricing Strategy Scenario TABLE 2 First Period First Price Choice Period (High or Profit Low) $1,000 $1,000 Drone Operator Andrew HIGH Price Drone Operator Andrew Charges HIGH Price: gets $0 profit Drone Operator Jasmine Charges LOW Price: gets $2,000 profit Drone Operator Andrew Charges HIGH Price: gets $1,500 profit Drone Operator Jasmine Charges HIGH Price: gets $1,500 profit…
- mall Dynaco Jains Pynaco gains 4. Synergy and Dynaco are the only two firms in a specific high - tech industry. They face the following payoff matrix as they determine the size of their research budget: Synergy's Deeision Small Bodget Lange Budget Synergy gain $420M Symedgy Dynaco ins Large budget Dynaro gains $30M Synergy Small Dynaco Jains Budget Jains zero Dynae's 2ero gains $70m Synergy Pynaco gains gains #50M Decision a. Does Synergy have a dominant strategy? Explain. b. Does Dynaco have a dominant strategy? Explain. c. Is there a Nash equilibrium for this scenario? Explain. (Hint: Look closely at the definition of Nash equilibrium.)In the game below, there are two equilibriums: both players play conserve or both players play plunder. If the game is repeated multiple times, players can maintain equilibrium in which conserve is played if: Player 2 Player 1 Conserve Plunder Select one: a. Conserve 100, 100 50,-100 Plunder -100, 50 0,0 Game is repeated many times and discount rates are high O b. Game is repeated few times and discount rates are low O c. Game is repeated few times and discount rates are high O d. Game is repeated many times and discount rates are lowWhy do we say that the "Rip-off," "False Economy," and "Overcharging" strategies are not market-oriented strategies? Are there instances when | any of these price positions may be justifiable? Explain.
- Кееp production $200 million $300 million Using what you know about the prisoner's dilemma, what would be the profit for Antel and constant IMD in millions? (cooperate Antel profit Antel profit is $20 million is $200 million Antel options IMD profit is IMD profit is $20 million $100 million Increase production (act independently) Antel profit Antel profit is $100 million is $300 million Antel profit: S million million IMD profit: S What would be the best collective option for both firms? Select all of the reasons Antel and IMD would make more profit at the original constant production level? соорerate Because overall demand for computer chips act independently will increase Because they can both charge more for the product at the given level of production Because it restricts the supply of computer chipsYou are in the market for a new couch and havefound two advertisements for the kind of couchyou want to buy. One seller notes in her ad that sheis selling because she is moving to a smaller apartment, and the couch won’t fit in the new space.The other seller says he is selling because the couchdoesn’t match his other furniture. Which seller doyou expect to buy from? Why? ( Hint: Think whowould be the more motivated seller.)This figure below shows the payoffs involved when Sarah and Joe work on a school project together for a single grade. They both will enjoy a higher grade when more effort is put into the project, but they also get pleasure from goofing off and not working on the project. The payoffs can be thought of as the utility each would get from the effort they individually put forth and the grade they jointly receive. Serah Lew Effen High Eet Low Effert Joe 15 High Effon The outcome of the game in the figure shown will be: Multiple Choice Joe puts forth high effort and Sarah puts forth low effort. Joe puts forth low effort and Sarah puts forth high effort. Joe and Sarah both put forth low effort. Joe and Sarah both put forth high effort.