Macmillan LearningBig Bear and Coffeebean are coffee chains in a metro area deciding on a pricing strategy. Use the payoff matrix below to answerthe questions. Assume that both firms have complete information on each other's payoff structure and that they choose theirpricing strategies simultaneously.Big BearHigh priceLow price$6 million$3 millionHigh priceCoffeebean$6 million$8 million$8 millionLow price$3 million$5 million$5 millionWhat is the Nash equilibrium in this game?the lower right quadrantIf this is a repeated game, what is one strategy the firms could employ to penalize noncooperative behavior?

Low price is the main selection strategy, and this is true for both players. Regardless of the…

Answered: Macmillan Learning Big Bear and…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Set-up the Oligopoly model in a game theoretical prisoner’s dilemma framework. Explain briefly the strategies and how you reach the Nash Equilibrium.
Part 2: First Long Question There are two French bakeries in a small town: Le Meilleur Croissant (C), owned by Camille, and Le Meilleur Pain Au Chocolat (P), owned by Paul. In each period of an infinitely repeated game, they compete a la Bertrand, with market demand given by Q(pmin) = 10 - Pmin- Even though they sell identical goods, they have different marginal costs: cc = 2 and %3D Cp = 4 (Paul bakes just as well but is bad at business decisions). There are no fixed costs. Question 6 Turns out that Camille and Paul are married, and so they choose prices to maximize the joint profits of the two firms. Because both love baking and love each other, they also jointly decide that both firms should be selling positive amounts in their optimal plan. What prices do they choose? Pc = 6, pp = 11 Pc = 6.5, pp = 6.5 Pc = 6, pp = 6 Pc = 7, pp = 7 %3D O pc = 6, pp = 7
The table below shows the payoffs for two firms competing through advertisement. Firm A and Firm B can each choose to advertise, or to not advertise. A's Strategy Advertise Don't Advertise Table 14.2 B's Strategy Advertise A's profit $100 million B's profit $100 million A's profit $50 million B's profit $200 million What is Firm A's dominant strategy? Don't Advertise A's profit $200 million B's profit $50 million C. Advertise d. Firm A does not have a dominant strategy A's profit $75 million B's profit $75 million a. Don't advertise b. Indeterminate from this information, as no information is provided on Firm A's risk preference.
In an oligopolistic industry there are only a few firms. Is this statement correct? Explain.
Exercise A.2 . Sinergy and Dinaco are the only two companies in a high-tech industry. They are faced with the following matrix of results when deciding their research budget: After analizing the graph, answer the following questions... a) Does Sinergy have a dominant strategy? Reason your answer. b) Does Dinaco have a dominant strategy? Reason your answer. c) Is there a Nash equilibrium in this scenario? Reason your answer.
Describe the basic elements of a game, strategy, payoffs, dominant strategy, and Nash equilibrium. How game theory can help to understand the behavior of an oligopolistic firm.
please answer all of the questions. thank youuu
1. Consider a Cournot duopoly with the inverse demand P = 260 - 2Q. Two firms compete choosing their quantities. Both firms have constant. marginal and average cost MC = AC = 20. a. Find each firm's best response function. b. Find the Cournot equilibrium. c. Plot the best response curves and illustrate the equilibrium point.
help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working
1. Perloff Chapter 14, Exercise 3.13 3.13 A duopoly faces an inverse market demand function of p = 120 - Q. Firm 1 has a constant marginal cost of 20. Firm 2's constant marginal cost is 40. Calculate the output of each firm, market output, and price in (a) a collusive equilibrium or (b) a Nash-Cournot equilibrium. (Hint: See Solved Problem 14.10.) M
here are two firms in the market, Pepsi and Coke. Strategies: Low price (price promotion, LP), Medium price (regular price, RP), high price (new price strategy, HP). Payoffs: Coke, Pepsi’s Net Profits; LP, LP: $1.4m, $1.2m; LP, RP: $3.1m, $0.6m; LP, HP: $3.9m, -$1.3m. RP, LP: $1.3m, $1.8m; RP, RP: $2.0m, $1.8m; RP, HP: $4.3m, $-0.3m. HP, LP: -$1.2m, $3.6m; HP, RP: $0.8m, $3.9m; HP, HP: $2.8m, $2.5m. In this game, the NE is (are): (HP, HP) (LP, LP) and (HP, HP) (LP, LP) There is no NE in this game (RP, RP)
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: Dairy King Advertise Doesn't Advertise Creamland Advertise 10, 10 18, 2 Doesn't Advertise 2, 18 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 $18 million, and Dairy King will make a profit of $2 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 _________ million if Dairy King advertises and a profit of ________ million if Dairy King does not advertise. If Creamland decides not to advertise, it will earn a profit of __________ million if Dairy King advertises and a profit of _________…

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