1&2 please Nash Equilibrium, Oligopolies & MonopoliesPricePricePriceLowMediumHighPrice Low12, 1215, 822, 4Price8, 1513, 1316, 10MediumPrice High4, 2210, 1614, 14Pepsi = Player at left#'s represent profits in millionsCoke = Player at right1) In the grid above, Pepsi is the player at the left and Coke is the player at the top.These two companies compete in an oligopoly (Market structure with very few producersin the market). What pricing strategy do you think Pepsi and Coke would use? Explainwhy.2)Based on the grid above, why would Pepsi and Coke never settle at (Price High,Price High)? (Hint: How could they cheat each other in that situation?)If Coke went out of business and we only had Pepsi, how might the price of Pepsi3)change? (Hint: Pepsi would probably be considered a monopoly.) Explain why.4)Based on what we have discussed in class, and based on the answers above,what kind of market is better for the consumers? A monopoly or an oligopoly? Explainyour answer.

An oligopoly defines a market structure where a few major firms dominate a substantial portion of…

Price Low Price Medium Price High Nash Equilibrium, Oligopolies & Monopolies Price Low 12, 12 8, 15 4,22 Price Medium 15,8 13, 13 10, 16 Price High 22,4 16, 10 14, 14 Pepsi = Player at left Coke Player at right 1) In the grid above, Pepsi is the player at the left and Coke is the player at the top. These two companies compete in an oligopoly (Market structure with very few producers in the market). What pricing strategy do you think Pepsi and Coke would use? Explain why. #'s represent profits in millions 2) Based on the grid above, why would Pepsi and Coke never settle at (Price High, Price High)? (Hint: How could they cheat each other in that situation?)

Price Low Price Medium Price High Nash Equilibrium, Oligopolies & Monopolies Price Low 12, 12 8, 15 4,22 Price Medium 15,8 13, 13 10, 16 Price High 22,4 16, 10 14, 14 Pepsi = Player at left Coke Player at right 1) In the grid above, Pepsi is the player at the left and Coke is the player at the top. These two companies compete in an oligopoly (Market structure with very few producers in the market). What pricing strategy do you think Pepsi and Coke would use? Explain why. #'s represent profits in millions 2) Based on the grid above, why would Pepsi and Coke never settle at (Price High, Price High)? (Hint: How could they cheat each other in that situation?)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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