9. Using a payoff matrix to determine the equilibrium outcomeSuppose there are only two firms that sell digital cameras, Picturesque and Capturemania. The following payoff matrix shows the profit (in millions ofdollars) each company will earn, depending on whether it sets a high or low price for its cameras.Picturesque Pricingfirms.For example, the lower, left cell shows that if Picturesque prices low and Capturemania prices high, Picturesque will earn a profit of $15 million andCapturemania will earn a profit of $2 million. Assume this is a simultaneous game and that Picturesque and Capturemania are both profit-maximizingHighLowIf Picturesque prices high, Capturemania will make more profit if it chooses aprofit if it chooses aCapturemania PricingHighLow11, 112,1515, 28,8If Capturemania prices high, Picturesque will make more profit if it chooses aprofit if it chooses a price.price.Considering all of the information given, pricing lowOIf the firms do not collude, which strategy will they end up choosing?Both Picturesque and Capturemania will choose a high price.Truea dominant strategy for both Picturesque and Capturemania.Both Picturesque and Capturemania will choose a low price.Falseprice, and if Picturesque prices low, Capturemania will make morePicturesque will choose a low price and Capturemania will choose a high price.price, and if Capturemania prices low, Picturesque will make morePicturesque will choose a high price and Capturemania will choose a low price.True or False: The game between Picturesque and Capturemania is an example of the prisoner's dilemma.

Dominant strategy is a concept in game theory where a player's best option is always to choose a…

If Picturesque prices high, Capturemania will make more profit if it chooses a profit if it chooses a ▼ price. If Capturemania prices high, Picturesque will make more profit if it chooses a profit if it chooses a price. Considering all of the information given, pricing low If the firms do not collude, which strategy will they end up choosing? OO Both Picturesque and Capturemania will choose a high price. a dominant strategy for both Picturesque and Capturemania. Both Picturesque and Capturemania will choose a low price. price, and if Picturesque prices low, Capturemania will make more Picturesque will choose a low price and Capturemania will choose a high price. price, and if Capturemania prices low, Picturesque will make more True Picturesque will choose a high price and Capturemania will choose a low price. True or False: The game between Picturesque and Capturemania is an example of the prisoner's dilemma. False

If Picturesque prices high, Capturemania will make more profit if it chooses a profit if it chooses a ▼ price. If Capturemania prices high, Picturesque will make more profit if it chooses a profit if it chooses a price. Considering all of the information given, pricing low If the firms do not collude, which strategy will they end up choosing? OO Both Picturesque and Capturemania will choose a high price. a dominant strategy for both Picturesque and Capturemania. Both Picturesque and Capturemania will choose a low price. price, and if Picturesque prices low, Capturemania will make more Picturesque will choose a low price and Capturemania will choose a high price. price, and if Capturemania prices low, Picturesque will make more True Picturesque will choose a high price and Capturemania will choose a low price. True or False: The game between Picturesque and Capturemania is an example of the prisoner's dilemma. False

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Select the correct statements. Note: Multiple correct, multiple selections. Topics covered: Stackelberg, Cournot, and Bertrand models. O A. Suppose the inverse market demand function is P (y) = a - by, and the marginal cost of each firm is K (same and constant). In this market, the market price will be higher if the market is a Stackelberg duopoly than the market price if it is a Cournot duopoly market. В. A Stackelberg leader will necessarily make at least as much profit as he would if he acted as a Cournot oligopolist. O C. Suppose, in a Stackelberg duopoly, the follower's output is measured on the horizontal axis. Profits to the follower will increase as we move to isoprofit lines that are further to the left. D. The equilibrium in Bertrand duopoly where both firms sell identical products is Pareto efficient. Е. In Cournot duopoly, if each firm has the same marginal MC = K, each firm produces the same level of output and earns the same profit.
The demand is homogenous product, Cournot duopoly is P=100 -2(Q1+Q2) and the costs are C1=20Q1 and C2=15Q2 1. Determine the reaction function of each firm II. Calculate each firm's equilibrium output. II. Calculate market price. note : do it word form inverse market
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Please no written by hand solution Suppose two firms compete in quantities (Cournot). Market demand is given by P = 260 − 2Q, where Q = q1 + q2. Both firms have constant MC = AT C = 20.a. Solve for the Cournot equilibrium and find the Cournot equilibrium profits for each firm.b. Now suppose the two firms formed a cartel. What would be the profits for each firm then?c. If firm 2 sticks to the cartel agreement (quantity), then what is the best response for firm 1 (if firm 1 were to deviate)? Find the profits for firm 1 from deviating.d. How large must the probability-adjusted discount factor be in order for the cartel to be stable?e. How would the answer to part d. change if the two firms were competing in prices (Bertrand)?Please answer all steps, because no too much detailed answers required.
In the Cournot oliogopoly model, firms compete by setting quantities. In class we noted that as the number of firms in the market grows very large, the outcome looks increasingly like what other model we studied? Provide intuition for your answer.
Answer neatly with proper explanation of each option given. Thank you
Suppose there are only two firms that sell digital cameras, Picturesque and Capturemania. The following payoff matrix shows the profit (in millions of dollars) each company will earn, depending on whether it sets a high or low price for its cameras. Capturemania Pricing High Low High 9, 9 2, 15 Picturesque Pricing Low 15, 2 8, 8 For example, the lower, left cell shows that if Picturesque prices low and Capturemania prices high, Picturesque will earn a profit of $15 million and Capturemania will earn a profit of $2 mllion. Assume this is a simultaneous game and that Picturesque and Capturemania are both profit-maximizing firms. If Picturesque prices high, Capturemania will make more profit if it chooses a price, and if Picturesque prices low, Capturemania will make more profit if it chooses a price. If Capturemania prices high, Picturesque will make more profit if it chooses a price, and if Capturemania prices low, Picturesque will make more profit if it chooses a price. Considering all…
11. Suppose there is a duopoly of two identical firms, A and B, facing a market inverse demand of P = 140 – 0.5Q, and cost functions of CA = 20QA and Cg = 20QB respectively. a. Find the Cournot-Nash equilibrium and profit for each firm. b. Suppose that A acts as the leader in a Stackelberg model and B responds. What are the respective quantities and profits of each firm now? Is it advantageous to move first? c. If the firms were able to collude, how much additional profit could they earn if they switch from simple single pricing to perfect price discrimination? d. Graph and label equilibria on the inverse demand.
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