6. Using a payoff matrix to determine the equilibrium outcomeSuppose that Zipride and Citron are the only two firms in a hypothetical market that produce and sell electric scooters. The following payoff matrixgives profit scenarios for each company (in millions of dollars), depending on whether it chooses to set a high or low price for scooters.Zipride Pricingprice.HighLowFor example, the lower-left cell shows that if Zipride prices low and Citron prices high, Zipride will earn a profit of $13 million, and Citron will earn aprofit of $3 million. Assume this is a simultaneous game and that Zipride and Citron are both profit-maximizing firms.Citron PricingHigh9,913, 3If Zipride prices high, Citron will make more profit if it chooses aLowIf the firms do not lude,3, 136, 6If Citron prices high, Zipride will make more profit if it chooses aprice.Considering all of the information given, pricing lowTrueFalseBoth Zipride and Citron will choose a low price.strategies will they end up choosing?price, and if Zipride prices low, Citron will make more profit if it chooses aprice, and if Citron prices low, Zipride will make more profit if it chooses aa dominant strategy for both Zipride and Citron.Zipride will choose a low price, and Citron will choose a high price.O Zipride will choose a high price, and Citron will choose a low price.Both Zipride and Citron will choose a high price.True or False: The game between Zipride and Citron is an example of the prisoners' dilemma.

In a duopoly, two firms compete with each other in the market. The firms move as per their…

If Zipride prices high, Citron will make more profit if it chooses a price. If Citron prices high, Zipride will make more profit if it chooses a price. Considering all of the information given, pricing low price, and if Zipride prices low, Citron will make more profit if it chooses a If the firms do not collude, what strategies will they end up choosing? price, and if Citron prices low, Zipride will make more profit if it chooses a a dominant strategy for both Zipride and Citron. O Both Zipride and Citron will choose a low price. O Zipride will choose a low price, and Citron will choose a high price. O Zipride will choose a high price, and Citron will choose a low price. O Both Zipride and Citron will choose a high price.

If Zipride prices high, Citron will make more profit if it chooses a price. If Citron prices high, Zipride will make more profit if it chooses a price. Considering all of the information given, pricing low price, and if Zipride prices low, Citron will make more profit if it chooses a If the firms do not collude, what strategies will they end up choosing? price, and if Citron prices low, Zipride will make more profit if it chooses a a dominant strategy for both Zipride and Citron. O Both Zipride and Citron will choose a low price. O Zipride will choose a low price, and Citron will choose a high price. O Zipride will choose a high price, and Citron will choose a low price. O Both Zipride and Citron will choose a high price.

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

6. Using a payoff matrix to determine the equilibrium outcome
Suppose that Zipride and Citron are the only two firms in a hypothetical market that produce and sell electric scooters. The following payoff matrix
gives profit scenarios for each company (in millions of dollars), depending on whether it chooses to set a high or low price for scooters.
Zipride Pricing
price.
High
Low
For example, the lower-left cell shows that if Zipride prices low and Citron prices high, Zipride will earn a profit of $13 million, and Citron will earn a
profit of $3 million. Assume this is a simultaneous game and that Zipride and Citron are both profit-maximizing firms.
Citron Pricing
High
9,9
13, 3
If Zipride prices high, Citron will make more profit if it chooses a
Low
If the firms do not lude,
3, 13
6, 6
If Citron prices high, Zipride will make more profit if it chooses a
price.
Considering all of the information given, pricing low
True
False
Both Zipride and Citron will choose a low price.
strategies will they end up choosing?
price, and if Zipride prices low, Citron will make more profit if it chooses a
price, and if Citron prices low, Zipride will make more profit if it chooses a
a dominant strategy for both Zipride and Citron.
Zipride will choose a low price, and Citron will choose a high price.
O Zipride will choose a high price, and Citron will choose a low price.
Both Zipride and Citron will choose a high price.
True or False: The game between Zipride and Citron is an example of the prisoners' dilemma.

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