Learning 20 You have developed a new computer operating system and are considering whether you should enter the market and compete with Microsoft. Microsoft has the option of offering their operating system for a high price or a low price. Once Microsoft selects a price, you will decide whether you want to enter the market or not enter the market. If Microsoft charges a high price and you enter, Microsoft will earn $30 million and you will earn $10 million. If Microsoft charges a high price and you do not enter, Microsoft will earn $60 million and you will earn $0. If Microsoft charges a low price and you enter, Microsoft will earn $20 million and you will lose $5 million. If Microsoft charges a low price and you do not enter, Microsoft will earn $50 million and you will earn $0. Construct a payoff table and find the Nash equilibrium if you and Microsoft both make your decisions simultaneously. a. In a simultaneous move game, Microsoft will and you will b. Now suppose that Microsoft selects a price first and then you decide whether you will enter the market. Create a game tree for this sequential move game. This part is not graded, but you will need to make the game tree on your own to answer the following question. Find the Nash equilibrium if Microsoft selects a price first. c. In this sequential move game, Microsoft will and you will
Learning 20 You have developed a new computer operating system and are considering whether you should enter the market and compete with Microsoft. Microsoft has the option of offering their operating system for a high price or a low price. Once Microsoft selects a price, you will decide whether you want to enter the market or not enter the market. If Microsoft charges a high price and you enter, Microsoft will earn $30 million and you will earn $10 million. If Microsoft charges a high price and you do not enter, Microsoft will earn $60 million and you will earn $0. If Microsoft charges a low price and you enter, Microsoft will earn $20 million and you will lose $5 million. If Microsoft charges a low price and you do not enter, Microsoft will earn $50 million and you will earn $0. Construct a payoff table and find the Nash equilibrium if you and Microsoft both make your decisions simultaneously. a. In a simultaneous move game, Microsoft will and you will b. Now suppose that Microsoft selects a price first and then you decide whether you will enter the market. Create a game tree for this sequential move game. This part is not graded, but you will need to make the game tree on your own to answer the following question. Find the Nash equilibrium if Microsoft selects a price first. c. In this sequential move game, Microsoft will and you will
Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN:9781305971493
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter17: Oligopoly
Section: Chapter Questions
Problem 9PA
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Transcribed Image Text:Learning
20 You have developed a new computer operating system and are considering whether you should enter the market and compete
with Microsoft. Microsoft has the option of offering their operating system for a high price or a low price. Once Microsoft
selects a price, you will decide whether you want to enter the market or not enter the market. If Microsoft charges a high price
and you enter, Microsoft will earn $30 million and you will earn $10 million. If Microsoft charges a high price and you do not
enter, Microsoft will earn $60 million and you will earn $0. If Microsoft charges a low price and you enter, Microsoft will earn
$20 million and you will lose $5 million. If Microsoft charges a low price and you do not enter, Microsoft will earn $50 million
and you will earn $0.
Construct a payoff table and find the Nash equilibrium if you and Microsoft both make your decisions simultaneously.
a. In a simultaneous move game, Microsoft will
and you will
b. Now suppose that Microsoft selects a price first and then you decide whether you will enter the market. Create a game tree for
this sequential move game. This part is not graded, but you will need to make the game tree on your own to answer the following
question.
Find the Nash equilibrium if Microsoft selects a price first.
c. In this sequential move game, Microsoft will
and you will
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