Buy-right is a chain of grocery stores operating in small cities throughout th southwestern United States. Buy-right's major competition comes from another chair Acme Food Stores. Both firms are currently contemplating their advertising strateg for the region. The possible outcomes are illustrated by the payoff matrix below.
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- Save Answer Consider two cigarette companies, PM Inc. and Brown Inc. If neither company advertises, the two companies spit the market and earn $60 million each. If they both advertise, they again split the market, but profits are lower by $20 million since each company must bear the cost of advertisirlg. Yet if one company advertises while the other does not, the one that advertises attracts customers from the other. In this case, the company that advertises earns $70 million while the company that does not advertise earns only $30 million. What will these two companies do if they behave as individual profit maximizers? Neither company will advertise, and PM Inc. earns $60. One company will advertise, the other will not. Brown Inc. earns $70. Both companies will advertise, and PM Inc. earns $40. Both companies will advertise, and PM Inc. earns $60.12. To advertise or not to advertise Suppose that two firms, Hatte Latte and Bean Bruuer, are the only sellers of espresso in some hypothetical market. The following payoff matrix gives the profit (in millions of dollars) earned by each company depending on whether or not it chooses to advertise: Bean Bruuer Advertise Doesn't Advertise Advertise Hatte Latte Doesn't Advertise 9,9 3,15 15,3 11, 11 For example, the lower left cell of the matrix shows that if Bean Bruuer advertises and Hatte Latte does not advertise, Bean Bruuer will make a profit of $15 million, and Hatte Latte will make a profit of $3 million. Assume this is a simultaneous game and that Hatte Latte and Bean Bruuer are both profit-maximizing firms. If Hatte Latte chooses to advertise, it will earn a profit of $ does not advertise. million if Bean Bruuer advertises and a profit of $ million if Bean Bruuer If Hatte Latte chooses not to advertise, it will earn a profit of $ does not advertise. million if Bean Bruuer…tory Bookmarks Profiles Quiz: Module 5 Qu x com/courses/111015/quizzes/852942/take To 9 7 C Tab Window Help Course Modules: Ex Topic: Planet Mon x | For the remaining questions consider two gas stations competing as an oligopoly. There are the only two gas stations in a small town. Each week they must simultaneously display their prices choosing between a high price and a low price. The payoff matrix below displays the weekly profits earned by the gas stations if they choose the various prices. Shell Decisions tv High Price Low Price Low Price NIDZA O V High Price S: $5,000 C: $5,500 (a) If Shell knows Chevron will choose the HIGH PRICE, what price should Shell choose? Low Price S: $7,500 C: $1,500 (b) If Shell knows Chevron will choose the LOW PRICE, what price should Shell choose? Low Price Aa Chevron Decisions (c) Does Shell have a dominant strategy? If so, what is it? Their dominant strategy is to Q Search Securify Module 5 Practice. x | Module 5 Lecture X (d) If Chevron knows…
- Reflection Journal for B220 Microeconomics Lesson 11: With reference to the graph above, a. Explain clearly the profit maximising decision by the above oligopoly. Calculate and shade the profit and total cost clearly. b. Unlike a monopoly, in an oligopolistic market structure, there will be efficient allocation of resources. Discuss by using appropriate graphical analysis and concepts covered today.6. Using a payoff matrix to determine the equilibrium outcome Suppose there are only two firms that sell tablets: Padmania and Capturesque. 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 tablets.5. To advertise or not to advertise Suppose that two firms, Frankencakes and Thinley's, are the only sellers of crepes in some hypothetical market. The following payoff matrix gives the profit (in millions of dollars) earned by each company depending on whether or not it chooses to advertise: Frankencakes Thinley's Advertise Doesn't Advertise Advertise 9,9 Doesn't Advertise 3,15 For example, the lower left cell of the matrix shows that if Thinley's advertises and Frankencakes does not advertise, Thinley's will make a profit of $15 million, and Frankencakes will make a profit of $3 million. Assume this is a simultaneous game and that Frankencakes and Thinley's are both profit- maximizing firms. advertise If Frankencakes chooses to advertise, it will earn a profit of 5 15,3 11.11 If Frankencakes chooses not to advertise, it will earn a profit of S not advertise. Both firms will choose to advertise O Both firms will choose not to advertise. million if Thinley's advertises and a profit of…
- fnan421 - Word Teri Gozden Geçir Görünum Yardım Ne yapmak istediğinizi soyleyin 2) Two firms, X and Y, are planning to market their new products. Each firm can develop TV, Laptop. Market research indicates that the resulting profits to each firm for the alternative strategies are given by the following payoff matrixi FIRM Y TV LAPTOP PHONE FIRM X TV 30, 30 50, 35 20, 50 LAPTOP 40,70 20, 20 50,80 PHONE 50,20 80,50 10,10 A) What will be the equilibrium if Firm X makes its selection first? If Firm Y goes first? ; (Ctrl) -Smith Cable, Inc. and Jones Glass Fibre Works are the two largest suppliers of a specialty fiber-optic cable used by NASA and military defense contractors. On the first day of every month, both companies post on the Internet a list of prices for their various fiber-optic cable products-either high prices or low prices. The following payoff table provides the monthly profits for Smith and Jones: Jones Glass Fibre Works High prices Low prices A C Smith Cable, Inc. High prices $7, S4 B D Low prices $2, $5.5 $8, S1 $4, $2 Payoffs in dollars of monthly profit (a) Suppose the pricing decision is made sequentially. Using the payoff table, complete the two sequential game trees. In the first game tree, let Smith Cable, Inc. make the first pricing decision. In the second game tree, let Jones Glass Fibre Works go first. After you complete the two game trees, solve both sequential decision games using the roll-back method. Circle the solution path on each game tree. (b) Do Smith Cable, Inc. and…Explain the general meaning of the profit payoff matrix below for oligopolists X and Y. All profit figures are in thousands. a. Use the payoff matrix to explain the mutual interdependence that characterizes oligopolistic industries. b. Assuming no collusion between X and Y, what is the likely pricing outcome? c. In view of your answer to 3b, explain why price collusion is mutually profitable. Why might there be a temptation to cheat on the collusive agreement?
- 6. Using a payoff matrix to determine the equilibrium outcome Suppose there are only two firms that sell tablets: Padmania and Capturesque. 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 tablets. Padmania Pricing High Low Capturesque Pricing High LOW 8,8 13,4 4, 13 7,7 For example, the lower-left cell shows that if Padmania prices low and Capturesque prices high, Padmania will earn a profit of $13 million, and Capturesque will earn a profit of $4 million. Assume this is a simultaneous game and that Padmania and Capturesque are both profit-maximizing firms. If Padmania prices high, Capturesque will make more profit if it chooses a profit if it chooses a price. If Capturesque prices high, Padmania will make more profit if it chooses a profit if it chooses a ▼price. Considering all of the information given, pricing low If the firms do not collude, what strategies will they end up…Exercise A.2 . Sinergy and Dinaco are the only two companies in a high-tech industry. They are faced with the following matrix of results when deciding their research budget: After analizing the graph, answer the following questions... a) Does Sinergy have a dominant strategy? Reason your answer. b) Does Dinaco have a dominant strategy? Reason your answer. c) Is there a Nash equilibrium in this scenario? Reason your answer.Company A and Company B are competing oligopolists. Both companies are considering increasing or maintaining their prices The payoff matrix shows the profits of the companies in millions based on their possible actions. Company B Increase Price Maintain Price Company A Increase Price $50, $40 $35, 530 Maintain Price 555, $45 $60, $35 The government offers a $5 milon subsidy to maintain current pricing. What is the expected outcome of the new payoff matrix, given the subsidy? The Nash equilibrium changes, and both companies will maintain their prices O The Nash equilbrium changes, and both companies will increase their prices O The Nash equilibrium remains the same, and both companies will increase their prices O Company A wit increase its price, whie Company B maintains its price. O Company A will maintain its price, while Company Bincreases ts price.