he Chinese government has created a fund worth more than 20 trillion won to foster the semiconductor dustry. Although there is a large technological difference between memory semiconductors, system emiconductors can be developed in a short period of time. The number of companies producing omogeneous quality products has increased. uestion (a) In the Cournot game, when the number of firms increases from 2 to n, compare the output, otal output, and profit of each firm with N.E. in the Cournot model. uestion (b) If the number of companies participating in the semiconductor market increases to infinity, at is, in a perfectly competitive market, what will be the equilibrium point?
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- Which of the following is true for Firm 1? Peach strictly dominates Apple. Banana strictly dominates Apple. Banana strictly dominates Grapes. Grapes strictly dominates Apple. Which of the following is true for Firm 2? Blue strictly dominates Purple. Green strictly dominates Blue. Green strictly dominates Pink. Pink strictly dominates Blue. Which of the following is the IEDS (Iterated Elimination of Dominated Strategies) outcome of the game? (Apple, Pink) (Banana, Green) (Peach, Pink) (Banana, Pink) True or False: The outcome (Peach, Pink) is Pareto Efficient. True or False: (Banana, Purple) is a Nash Equilibrium.QUESTION 8 Appel and Samseng were 2 rival companies in producing smartphones but both have recently been bought by a billionaire, Eelon Mask. Appel is able to produce 500 phone processors in one day or assemble 600 phones in one day. Samseng is able to produce 430 phone processors in one day or assemble 550 phones in one day. Eelon wants both companies to specialise so he can maximise their output. Select the item from the list provided to make the following statements true. - - ✓ Appel has absolute advantage in ✓ Opportunity cost of Samseng assembling 1 phone is ✓ Samseng has in assembling phones. 1. producing 1.20 phone processors 2. absolute advantage 3. both producing phone processors and assembling phones 4. producing 0.78 phone processors 5. producing 0.83 phone processors 6. neither absolute nor comparative advantage 7. neither producing phone processors nor assembling phones 8. comparative advantage 9. assembling phones 10. producing 1.28 phone processors 11. producing phone…1. The market (inverse) demand function for a homogeneous good is P(Q) = 10 - Q. There are two firms: firm 1 has a constant marginal cost of 2 for producing each unit of the good, and firm 2 has a constant marginal cost of 1. The two firms compete by setting their quantities of production, and the price of the good is determined by the market demand function given the total quantity. a. Calculate the Nash equilibrium in this game and the corresponding market price when firms simultaneously choose quantities. b. Now suppose firml moves earlier than firm 2 and firm 2 observes firm 1 quantity choice before choosing its quantity find optimal choices of firm 1 and firm 2.
- . OPEC, the Organization of Petroleum Exporting Countries, was founded in 1969. Their original objective was to form a cartel to increase the price that they receive for their oil exports. Create a prisoner’s dilemma type game for two large members of OPEC (e.g. Saudi Arabia and Indonesia). Create numbers, where payoffs are total annual oil export revenues for each of these two countries. Verbally explain how you got your numbers. Find the Nash equilibrium. Based on this model, what strategy is in the oil exporters’ best interest (Nash or otherwise)? How do they make it happen? Create another prisoner’s dilemmamodel for all of OPEC on one side, and all non OPEC oil exporting nations on the other side. Create numbers, where payoffs are total annual oil export revenues for each of the two sides. Verbally explain how you created your numbers. Also create your numbers applying the fact that OPEC’s total production capacity is greater than total non OPEC exports…QUESTION 13 Consider a market where two firms (1 and 2) produce differentiated goods and compete in prices. The demand for firm 1 is given by D₁(P₁, P2) = 140 - 2p1 + P2 and demand for firm 2's product is D2 (P1, P2) 140 - 2p2 + P1 Both firms have a constant marginal cost of 20. What is the Nash equilibrium price of firm 1? (Only give a full number; if necessary, round to the lower integer; no dollar sign.)8. To advertise or not to advertise Suppose that Creamland and Dairy King are the only two firms that sell ice cream. The following payoff matrix shows the profit (in millions of dollars) each company will earn depending on whether or not it advertises: Creamland Dairy King Advertises Doesn't Advertise 9,9 Doesn't Advertise 3, 15 Advertises 15, 3 11, 11 For example, the upper-right cell shows that, if Creamland advertises and Dairy King doesn't advertise, Creamland will make a profit of $15 million, and Dairy King will make a profit of $3 million. Assume this is a simultaneous game and that Creamland and Dairy King are both profit-maximizing firms. If Creamland decides to advertise, it will earn a profit of $ not advertise. If Creamland decides not to advertise, it will earn a profit of $ does not advertise. million if Dairy King advertises and a profit of $ If Dairy King advertises, Creamland makes a higher profit if it chooses million if Dairy King advertises and a profit of $…
- 2. An industry contains two firms that have identical cost functions C(q)=10+2q. The inverse demand function for the market is P=50-2Q where Q is the total industry output. Assuming the firms compete in quantities: Find the firms' best response functions. b. Solve for the Cournot Nash Equilibrium of the game. What is the total industry output in equilibrium? What is the equilibrium price? с. i. If both firms could collude, what would the industry output and price be? Suppose they decide that each firm produces half of the industry output found in part (i). Is this agreement self-enforcing? Explain. ii. a.Question 25 Consider two cigarette companies, PM Inc. and Brown Inc. If neither company advertises, the two companies split the market and earn $60 million each. If they both advertise, they again split the market, but profits are lower by $20 million since each company must bear the cost of advertising. Yet, if one company advertises while the other does not, the one that advertises attracts customers from the other. In this case, the company that advertises earns $70 million while the company that does not advertise earns only $30 million. What will these two companies do if they behave as individual profit maximizers? Both companies will advertise. Brown Inc. earns $40. Neither company will advertise. Brown Inc. earns $60. Both companies will advertise. PM Inc. earns $60. One company will advertise, and the other will not. Brown Inc. earns $70.Construct the sequential game tree when Cable-net takes the first mover position by deciding whether to invest in infrastructure capacity expansion. Find the Nash equilibrium path by using the roll-back technique. How much profit does each firm earn? (Hint: the game tree will have three sequential decisions: Cable-net makes the decision first whether to invest in infrastructure capacity expansion, Peoplenet makes the entry decision, and Cable-net decides whether to lower the price.)
- 19) The soft-drink industry is dominated by Coca-Cola and Pepsi and each firm spends a lot of money on advertising. Suppose each firm is considering a costly television commercial during halftime of the Super Bowl. The table shows the payoff matrix of profits that each firm would receive from their advertising decision, given the advertising decision of their rival. Profits in each cell of the payoff matrix are given as (Coke, Pepsi). If each firm makes the decision to advertise on the Super Bowl independently, what is the Nash equilibrium of this game? Table: Coke and Pepsi Advertising Game Pepsi Super Bowl Ad No Super Bowl Ad Super Bowl Ad No Super Bowl Ad $800, $700 $1,500, $600 Coke $650, $900 $1,000, $800 O A. Both firms advertise during the Super Bowl. O B. Neither firm advertises during the Super Bowl. C. Pepsi advertises, but Coke does not advertise during the Super O Bowl. OD. Coke advertises, but Pepsi does not advertise during the Super Bowl.(Use for Questions 4-6): The Ulysses Corporation and the Xenophon Company level of advertising in trade journals. The payoff matrix (profit in millions of dollars) is as follows: are the only producers of a sophisticated type of camera. They each can engage in either a high or a low Xenophon Company Low Level High Level Х, $13M U, $12M X, $12M U, $11M Low Level Ulysses Corp Х, S12M U, $13M X, $11M U, $12M High Level Is there a Nash Equilibrium? Why or why not?1. Two firms (A and B) play a competition game (i.e. Cournot) in which they can choose any Qi from 0 to ¥. The firms have the same cost functions C(Qi) = 10Qi + 0.5Qi2, and thus MCi = 10 + Qi. They face a market demand curve of P = 220 – (QA + QB). Now assume firm A chooses quantity first. Firm B observes this choice and then chooses its own quantity. d)Firm A has MRA = 150 – 4QA/3. What are the equilibrium QA and QB selected in this game? e)What is the equilibrium price, and how much profit does each firm collect?