Firm A's strategy Low price High price Firm A Profit = $81 Firm A Profit = $107 High price Firm B Profit = $81 Firm B Profit =$35 Firm B's strategy Firm A Profit = $35 Firm A Profit = $73 Low price Firm B Profit=$107 Firm B Profit = $73 Suppose both firms have agreed to employ strategies that maximize their combined profits. How will the firms act? Firm A will Firm B will Set a low price Set a low price O Set a high price O Set a high price Compare the profits of Firm A when both firms respect the collusive agreement to the profits of Firm A when Firm A secretly cheats on the agreement. How much additional profit would Firm A earn by secretly cheating on the agreement to collude? Round your answer to the nearest whole number. Firm A's additional profit when cheating: $ Compare the profits of Firm A when both firms respect the collusive agreement to the profits of Firm A when both firms cheat on the agreement. By how much would the profit of Firm A fall if both firms cheat on the agreement to collude? Round your answer to the nearest whole number.

Firm A's strategy Low price High price Firm A Profit = $81 Firm A Profit = $107 High price Firm B Profit = $81 Firm B Profit =$35 Firm B's strategy Firm A Profit = $35 Firm A Profit = $73 Low price Firm B Profit=$107 Firm B Profit = $73 Suppose both firms have agreed to employ strategies that maximize their combined profits. How will the firms act? Firm A will Firm B will Set a low price Set a low price O Set a high price O Set a high price Compare the profits of Firm A when both firms respect the collusive agreement to the profits of Firm A when Firm A secretly cheats on the agreement. How much additional profit would Firm A earn by secretly cheating on the agreement to collude? Round your answer to the nearest whole number. Firm A's additional profit when cheating: $ Compare the profits of Firm A when both firms respect the collusive agreement to the profits of Firm A when both firms cheat on the agreement. By how much would the profit of Firm A fall if both firms cheat on the agreement to collude? Round your answer to the nearest whole number.

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

Firm A's strategy
Low price
High price
Firm A Profit = $81
Firm A Profit = $107
High price
Firm B Profit = $81
Firm B Profit =$35
Firm B's strategy
Firm A Profit = $35
Firm A Profit = $73
Low price
Firm B Profit=$107
Firm B Profit = $73
Suppose both firms have agreed to employ strategies that maximize their combined profits. How will the firms act?
Firm A will
Firm B will
Set a low price
Set a low price
O Set a high price
O Set a high price
Compare the profits of Firm A when both firms respect the collusive agreement to the profits of Firm A when Firm A secretly
cheats on the agreement. How much additional profit would Firm A earn by secretly cheating on the agreement to collude?
Round your answer to the nearest whole number.
Firm A's additional profit when cheating: $
Compare the profits of Firm A when both firms respect the collusive agreement to the profits of Firm A when both firms cheat
on the agreement. By how much would the profit of Firm A fall if both firms cheat on the agreement to collude? Round your
answer to the nearest whole number.

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Compare the profits of Firm A when both firms respect the collusive agreement to the profits of Firm A when Firm A secretly cheats on the agreement. How much additional profit would Firm A earn by secretly cheating on the agreement to collude? Round your answer to the nearest whole number.

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