Dizz Cut price Maintain price Perlis Cut price (-1,-1) A (2,-2) B Maintain price (-2,2) (1,1) D Figure 12 Payoff matrix for two firms in oligopoly Two firms, Perlis and Dizz, produce washing powder in a market characterised by oligopoly. Each firm can increase its market share and profits by cutting its price relative to its rival. However if both firms cut prices they both suffer a fall in profit. This situation may be characterised as a game and Figure 12 shows the payoff matrix for this game. Figure 12 also labels each cell in the payoff matrix with a letter, A, B, C or D. Based on the information in the payoff matrix, decide which cells, if any, correspond to a Nash equilibrium. Select one answer. Select one: O There is no Nash equilibrium O D O A O A and D

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question
Dizz
Cut price
Maintain price
Perlis
Cut price
(-1,-1)
A
(2,-2)
B
Maintain price
(-2,2)
(1,1)
D
Figure 12 Payoff matrix for two firms in oligopoly
Two firms, Perlis and Dizz, produce washing powder in a market characterised by oligopoly. Each firm
can increase its market share and profits by cutting its price relative to its rival. However if both firms cut
prices they both suffer a fall in profit. This situation may be characterised as a game and Figure 12
shows the payoff matrix for this game.
Figure 12 also labels each cell in the payoff matrix with a letter, A, B, C or D. Based on the information in
the payoff matrix, decide which cells, if any, correspond to a Nash equilibrium. Select one answer.
Select one:
O There is no Nash equilibrium
O D
O A
O A and D
Transcribed Image Text:Dizz Cut price Maintain price Perlis Cut price (-1,-1) A (2,-2) B Maintain price (-2,2) (1,1) D Figure 12 Payoff matrix for two firms in oligopoly Two firms, Perlis and Dizz, produce washing powder in a market characterised by oligopoly. Each firm can increase its market share and profits by cutting its price relative to its rival. However if both firms cut prices they both suffer a fall in profit. This situation may be characterised as a game and Figure 12 shows the payoff matrix for this game. Figure 12 also labels each cell in the payoff matrix with a letter, A, B, C or D. Based on the information in the payoff matrix, decide which cells, if any, correspond to a Nash equilibrium. Select one answer. Select one: O There is no Nash equilibrium O D O A O A and D
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Sequential Game
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
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education