Mary and Raj are the only two growers who provide organically grown corn to a local grocery store. They know that if they cooperated and produced les corn, they could raise the price of the corn. If they work independently, they will each earn $100. If they decide to work together and both lower their output, they can each earn $150. If one person lowers output and the other does not, the person who lowers output will earn $0 and the other person will capture the entire market and will earn $200. The table represents the choices available to Mary and Raj. What is the best choice for Raj if he is sure that Mary will cooperate? Mary Keeps Producing Raj Keeps Producing $100, $100 Raj Lowers Output $0, $200 Mary Lowers Output $200, $0 $150, $150 O If Raj is sure Mary will cooperate, he should cheat. O If Raj is sure that Mary will cooperate, he should agree to work together. O If Raj is sure Mary will cooperate, he should work independently. s

Mary and Raj are the only two growers who provide organically grown corn to a local grocery store. They know that if they cooperated and produced les corn, they could raise the price of the corn. If they work independently, they will each earn $100. If they decide to work together and both lower their output, they can each earn $150. If one person lowers output and the other does not, the person who lowers output will earn $0 and the other person will capture the entire market and will earn $200. The table represents the choices available to Mary and Raj. What is the best choice for Raj if he is sure that Mary will cooperate? Mary Keeps Producing Raj Keeps Producing $100, $100 Raj Lowers Output $0, $200 Mary Lowers Output $200, $0 $150, $150 O If Raj is sure Mary will cooperate, he should cheat. O If Raj is sure that Mary will cooperate, he should agree to work together. O If Raj is sure Mary will cooperate, he should work independently. s

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Please no written by hand solutions
Captain Catahoula and Bow Wow Wonder are two of the four firms in the dog food industry. Before they notify the Federal Trade Commission and the Department of Justice of their plans to merge, Captain Catahoula hires you to determine the concentration of this industry. Use the table to calculate the Herfindahl-Hirschman Index (HHI) for this dog food industry and then complete the sentence. Firm Bow Wow Wonder Waggin' Tails Mongrel Munchies Captain Catahoula HHI: Industry 10% 24% 26% 40% What is the HHI for this dog food industry?
Time remaining: 00:09:51 Economics The market demand function is Q=10,000-1,000p. Each firm has a marginal cost of m=$0.16. Firm 1, the leader, acts before Firm 2, the follower. Solve for the Stackelberg-Nash equilibrium quantities, prices, and profits. Compare your solution to the Cournot-Nash equilibrium. The Stackelberg-Nash equilibrium quantities are: q1=___________ units and q2=____________units The Stackelberg-Nash equilibrium price is: p=$_____________ Profits for the firms are profit1=$_______________ and profit2=$_______________ The Cournot-Nash equilibrium quantities are: q1=______________units and q2=______________units The Cournot-Nash equilibrium price is: p=$______________ Profits for the firms are profit1=$_____________ and profit2=$_______________
Rod and Todd Flanders have been working jobs in HR that pay $40,000 and $20,000 per year, respectively. They are trying to decide whether to quit their jobs and jointly open a snow cone shack, which they estimate can earn $100,000 per year. According to the Nonstrategic view of bargaining, how will the snow cone shack proceeds be split? Rod and Todd Flanders have been working jobs in HR that pay $40,000 and $20,000 per year, respectively. They are trying to decide whether to quit their jobs and jointly open a snow cone shack, which they estimate can earn $100,000 per year. According to the Nonstrategic view of bargaining, how will the snow cone shack proceeds be split? Rod gets $50,000 and Todd gets $50,000 Rod gets $66,666.67 and Todd gets $33,333.33 they won't quit their jobs. Rod gets $60,000 and Todd gets $40,000
Suppose that firms in a two-firm industry choose quantities every month, and each month the firms sell at the market-clearing price determined by the quantities they choose. Each firm has a constant marginal cost, and the market demand curve is linear of the form P = a - bQ, where Q is total industry quantity and P is the market price. Suppose that initially each firm has the same constant marginal cost. Further suppose that each month the firms attain the Cournot equilibrium in quantities. a) Suppose that it is observed that from one month to the next Firm 1’s quantity goes down, Firm 2’s quantity goes up, and the market price goes up. A change in the demand and/or cost conditions consistent with what we observe is: i) The market demand curve shifted leftward in a parallel fashion. ii) The market demand curve shifted rightward in a parallel fashion. iii) Firm 1’s marginal cost went up, while Firm 2’s marginal cost stayed the same. iv) Firm 2’s…
1. Two firms compete in price in a market for infinite periods. In this market, there are N consumers; each buys one unit per period if the price does not exceed $10 and nothing otherwise. Consumers buy from the firm selling at a lower price. In case both firms charge the same price, assume N/2 consumers buy from each firm. Assume zero production cost for both firms. A possible strategy that may support the collusive equilibrium is: Announce a price of $10 if the equilibrium price has always been $10; otherwise, announce the price as in Nash equilibrium of the one-shot Bertrand game. 1.a Let & be the discount factor. Find the condition on & such that the above strategy can indeed support the collusive equilibrium. Now suppose that Firm 2's marginal cost is $4, but Firm 1's marginal cost remains at zero. 1.b Find the condition on & under which Firm 2 will not deviate from the collusive equilibrium. 1.c Find the condition on under which Firm 1 will not deviate from the collusive…
1. Two firms compete in price in a market for infinite periods. In this market, there are N consumers; each buys one unit per period if the price does not exceed $10 and nothing otherwise. Consumers buy from the firm selling at a lower price. In case both firms charge the same price, assume N/2 consumers buy from each firm. Assume zero production cost for both firms. A possible strategy that may support the collusive equilibrium is: Announce a price of $10 if the equilibrium price has always been $10; otherwise, announce the price as in Nash equilibrium of the one-shot Bertrand game.
Answer the following questions regarding the matrix below, which represents the strategic interaction between the two largest movie production studios, Universal Pictures and 20th Century Fox. They are each deciding the release dates for their own summer blockbuster action movies. They can release their movies in June, July, or August. Because of limited demand for going to the movies, each firm would generally rather release their movies earlier than later. Similarly, they would rather not release their movies at the same time, as it dilutes the demand for their movies. The matrix form of the game is as follows: Universal June July August June 5,5 4,6 7,8 Fox July 6,4 5,5 4,6 August 8,6 6,5 5,4 d) Suppose Universal and Fox make their decisions simultaneously. Are there any Nash equilibria? If so, what are they? Show your work. e) Suppose they move sequentially, and that Fox moves first. First set up the game tree. What will be the equilibrium path of the subgame perfect Nash…
Janeek and Raj are the only two growers who provide organically grown com to a local grocery store. They know that if they cooperated and produced less com, they could raise the price of the corn. If they work independently, they will each earn $100. If they decide to work together and both lower their output, they can each earn $150. if one person lowers output and the other does not, the person who lowers output will earn $0 and the other person will capture the entire market and will earn $200. Reference the game illustrated below where the first payout in each cell is for Janeek and the second is for Raj. (J.R) Independent Cooperate Independent ($100, $100) ($0, $200) What is the Nash Equilibrium for this game? Ⓒ(Cooperate, Cooperate) (Cooperate, Independent) (Independent, Cooperate) (Independent, Independent) Cooperate ($200, 50) ($150, $150)
Two companies produce similar items for the same market. Company 1 produces q₁ items and Company 2 produces q2 items. The costs C₁ and C₂ incurred by Company 1 and Company 2, respectively, are given by C₁ = 79₁ and C₂ = 1092, and the market price P is given by P = 100-91-92. Let ₁ and 2 denote the profits made by Company 1 and Company 2, respectively. Each company wants to choose its production strategy in order to maximize its profit. (a) Find expressions for ₁ and ₂ in terms of 9₁ and 92. (b) Find the solution of this problem, using the Cournot model.
Mercedes Benz seem to win every time with their social media campaigns. The one that stands out to me was back in 2013 when they created what I still believe to be one of the best Instagram marketing campaigns to date. Mercedes wanted to reach out to the younger audience so they hired five top Instagram photographers to each take the wheel of a new Mercedes CLA. Whoever got the most likes got to keep the car – so they all really worked at it! By the end of the campaign, Mercedes has received: 87,000,000 organic Instagram impressions 2,000,000 Instagram likes 150 new marketing assets (stunning photos) Q1. What lessons can you learn from this? Could you put your followers up for a challenge and make it into a competition or campaign? Q2. Can you do a competition that gets people trying out your product first? Q3. Think about your target audience. What is a prize they would value? Q4. Like Mercedes you could recruit bloggers/influencers via social media and get them blogging about your…
cost function is c(y) An industry has two firms. Firm 1's cost function is c(y) = 3y + 200 and firm 2's 3y + 100. The demand curve for the output of this industry is a downward-sloping straight line. In a Cournot equilibrium, where both firms produce positive amounts of output: = The firm with higher fixed costs produces more. Both firms produce the same amount of output. There is less output than there would be if the firms colluded to maximize joint profits. It is not possible to tell because the demand function is not specified. The firm with lower fixed costs produces more.