PQ 18.02 (and 18.03) Two businesses in a market can decide to increase the amount of stores they operate. If neither business adds new stores they will each earn $10 million in profit; if both add new stores they will each earn $4 million in profit; and if one adds new stores while the other does not, the business adding new stores earns profit of $10 million and the other earns profit of $5 million. If these businesses are not colluding we would expect: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a both may or may not add new stores. b one business will add new stores and the other will not. c both will add new stores. d neither will add new stores.

PQ 18.02 (and 18.03) Two businesses in a market can decide to increase the amount of stores they operate. If neither business adds new stores they will each earn $10 million in profit; if both add new stores they will each earn $4 million in profit; and if one adds new stores while the other does not, the business adding new stores earns profit of $10 million and the other earns profit of $5 million. If these businesses are not colluding we would expect: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a both may or may not add new stores. b one business will add new stores and the other will not. c both will add new stores. d neither will add new stores.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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q19 If you advertise and your rival advertises, you each will earn $4 million in profits. If neither of you advertises, you will each earn $10 million in profits. However, if one of you advertises and the other does not, the firm that advertises will earn $1 million and the non-advertising firm will earn $5 million. If you and your rival plan to be in business for 10 years, then the Nash equilibrium is a. for each firm to not advertise in any year. b. for neither firm to advertise in early years but to advertise in later years. c. for each firm to advertise every year. d. for each firm to advertise in early years but not advertise in later years.
Offer Bud Light Don't Offer New Ads New Ads Offer New Ads B: $100 B: $50 M: $100 M: $200 Miller Lite Don't Offer New Ads B: $200 M: $50 B: $120 M: $120 Refer to Table 14.2.4. The marketers of Budweiser Light beer and Miller Lite beer must decide whether or not to offer new advertising campaigns promoting their products. The payoffs in the table are the economic profit made by Bud and Miller. Which one of the following observations is correct? This game has no Nash equilibrium. Bud has a dominant strategy but Miller does not. This game has no dominant strategies. Bud and Miller each have a dominant strategy. Miller has a dominant strategy but Bud does not.
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Two firms compete in selling identical widgets. They choose their output levels Q1 and Q2 simultaneously and face the demand curve P = 30 - Q where Q = Q1 + Q2. Until recently, both firms had zero marginal costs. Recent environmental regulations have increased Firm 2’s marginal cost to $15. Firm 1’s marginal cost remains constant at zero. TRUE-FALSE: Is the following statement true of false? ”As a result, the market price will rise to the monopoly level.” Solve for the Cournot equilibrium and write a convincing explanation of your answer.
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Beta's Price Policy High Low A B $20 $30 High Alpha's Price Policy $20 $10 C D $10 $15 Low $30 $15 Refer to the diagram, where the numerical data show profits in millions of dollars. Beta's profits are shown in the northeast corner and Alpha's profits in the southwest corner of each cell. If both firms follow a high-price policy. Multiple Choice Beta will realize a $10 million profit and Alpha a $30 million profit. each will realize a $15 million profit Alpha will realize a $10 million profit and Beta a $30 million profit
MCQ 27 Consider the following game in which two firms (OLD and NEW) are considering whether or not to advertise to increase sales. Each firm knows that the impact on profits depends on what the other firm chooses to do. The possible profit outcomes of the game are shown below, with OLD's profits shown as the first number in each pair and NEW's profits shown as the second number: NEW Advertise Not Advertise Advertise 10, 5 15, 1 OLD Not Advertise 5, 8 20, 3 Assuming the firms aim to earn as much profit as possible, which of the following is TRUE for the game? A I do not want to answer this question. OLD's dominant strategy is to advertise C OLD's dominant strategy is not to advertise NEW's dominant strategy is not to advertise E NEW's dominant strategy is to advertise F the dominant strategy for both OLD and NEW is to advertise
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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)