Disney Land (California) Price Low Price High Price Low $200 $120 $300 $210 Private Hotels Price High $250 $150 $150 $250 Disney Land is located on a relatively small property in California. Suppose there are no hotels within Disney Land but many private hotels located right outside the gate. Suppose the above game theory table describes the profit situation facing Disney Land and these hotels. a) Which box would generate the highest overall profit? Will this box be able to be maintained? Explain why or why not. b) Which box represents the Nash Equilibrium without Disney and the hotels cooperating? c) What action might Disney or the hotels do to reach the optimal price combination?

Disney Land (California) Price Low Price High Price Low $200 $120 $300 $210 Private Hotels Price High $250 $150 $150 $250 Disney Land is located on a relatively small property in California. Suppose there are no hotels within Disney Land but many private hotels located right outside the gate. Suppose the above game theory table describes the profit situation facing Disney Land and these hotels. a) Which box would generate the highest overall profit? Will this box be able to be maintained? Explain why or why not. b) Which box represents the Nash Equilibrium without Disney and the hotels cooperating? c) What action might Disney or the hotels do to reach the optimal price combination?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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