part C Di need it in words not hanndwritten Question 3Suppose QM Phones and UCL Phones each develop their own versions of a new smartphone. Thenew phones are different from the existing ones but each share similar functions and designs. Thefirms are trying to decide on the price of their unique phones. If they both charge high price, QMmakes £6 million and UCL makes £5 million economic profits. If QM charges high price but UCLcharges low price, they make £3 million and £7 million respectively. If however QM charges lowprice and UCL charges high price, they make £ £8 million and £1 million respectively. If bothcharge low price, QM earns £4 million and UCL earns £3 million economic profits.a) Describe the strategies in the game. Construct the payoff matrix.b) Does QM have a dominant strategy. Does UCL have a dominant strategy? Explain.c) If the game is played only once what is the equilibrium? Is it a dominant-strategyequilibrium? Explain.d) Is there a Nash equilibrium? Explain. What is the best outcome for either of the firms?Explain.

Introduction: The difference between the money gained from the sale of a product and the costs of…

c) If the game is played only once what is the equilibrium? Is it a dominant-strategy equilibrium? Explain. d) Is there a Nash equilibrium? Explain. What is the best outcome for either of the firms? Explain.

c) If the game is played only once what is the equilibrium? Is it a dominant-strategy equilibrium? Explain. d) Is there a Nash equilibrium? Explain. What is the best outcome for either of the firms? Explain.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

part C D

i need it in words

not hanndwritten

Question 3
Suppose QM Phones and UCL Phones each develop their own versions of a new smartphone. The
new phones are different from the existing ones but each share similar functions and designs. The
firms are trying to decide on the price of their unique phones. If they both charge high price, QM
makes £6 million and UCL makes £5 million economic profits. If QM charges high price but UCL
charges low price, they make £3 million and £7 million respectively. If however QM charges low
price and UCL charges high price, they make £ £8 million and £1 million respectively. If both
charge low price, QM earns £4 million and UCL earns £3 million economic profits.
a) Describe the strategies in the game. Construct the payoff matrix.
b) Does QM have a dominant strategy. Does UCL have a dominant strategy? Explain.
c) If the game is played only once what is the equilibrium? Is it a dominant-strategy
equilibrium? Explain.
d) Is there a Nash equilibrium? Explain. What is the best outcome for either of the firms?
Explain.

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