FIRM A Collude Compete Produce 35m Produce 20m A: $200m profits A: $300 profits Collude Produce 30m| B: $300m profits B: $170m profits FIRM B A: $50 m profits A: $100 profits Compete Produce 50m| B: $400m profits B: $200m profits Given the payoffs in the matrix shown, Firm A: should always choose to collude, regardless of Firm B's actions. should always choose to compete, regardless of Firm B's actions. should compete if Firm A competes and collude if Firm B colludes. should compete if Firm A colludes and collude if Firm B competes.

FIRM A Collude Compete Produce 35m Produce 20m A: $200m profits A: $300 profits Collude Produce 30m| B: $300m profits B: $170m profits FIRM B A: $50 m profits A: $100 profits Compete Produce 50m| B: $400m profits B: $200m profits Given the payoffs in the matrix shown, Firm A: should always choose to collude, regardless of Firm B's actions. should always choose to compete, regardless of Firm B's actions. should compete if Firm A competes and collude if Firm B colludes. should compete if Firm A colludes and collude if Firm B competes.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Two rival companies competing in the same market need to decide their plans for future expansion of their stores. The Table below shows the possible outcomes of their mutually interdependent actions (payoffs are profits in £m) Giga Company Titanic Conglomerate No Change Refurbishment of existing stores Large Expansion No Change 30, 40 25, 35 15, 24 Refurbishment of existing stores 35, 30 28, 32 18, 33 Large Expansion 12, 22 18, 20 20, 25 The Nash equilibrium: (A) does not exist. (B) occurs when both firms choose Refurbishment of existing stores. (C) occurs when both firms choose Large Expansion. (D) occurs when both firms choose No Change.
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N: $30 V: $130 High price New firm N: $50 V: $100 Low price Advertise Verizon N: $60 V: $140 Do not advertise Expand High price New New firm firm Low price N: $70 V: $90 Do not N: $30 V: $170 The figure shown displays the choices that could be made by Verizon and a new firm in the industry. The payoffs are the profits (in millions) these companies will earn as a result of their choices. What will be the outcome of this game? Multiple Choice The new firm will expand; Verizon will advertise; the new firm will choose high prices. The new firm will expand; Verizon will advertise; the new firm will choose low prices. The new firm will expand; Verizon will not advertise; the new firm will choose high prices. The new firm will not expand. еxpand
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