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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In a Nash - Cournot equilibrium, does an oligopolistic firm produce at less than full capacity, full capacity, or more than full capacity? Explain.
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
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Smith Cable, Inc. and Jones Glass Fibre Works are the two largest suppliers of a specialty fiber-optic cable used by NASA and military defense contractors. On the first day of every month, both companies post on the Internet a list of prices for their various fiber-optic cable products-either high prices or low prices. The following payoff table provides the monthly profits for Smith and Jones: Jones Glass Fibre Works High prices Low prices A C Smith Cable, Inc. High prices $7, S4 B D Low prices $2, $5.5 $8, S1 $4, $2 Payoffs in dollars of monthly profit (a) Suppose the pricing decision is made sequentially. Using the payoff table, complete the two sequential game trees. In the first game tree, let Smith Cable, Inc. make the first pricing decision. In the second game tree, let Jones Glass Fibre Works go first. After you complete the two game trees, solve both sequential decision games using the roll-back method. Circle the solution path on each game tree. (b) Do Smith Cable, Inc. and…
two firms in an oligopolistic market produce homogeneous products and compete on price choice they face the following demand and cost functions p=40-0.4Q TC1=10q1 TC1=8q1 what level of output will each firm produce and how much price will they charge and how much profit will they make?
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.
Kindly answer this one, thank you
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

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