Question 1/ LG and Samsung are both releasing a new smartphone at the same time. Each company is fairly well known, and they are both deciding between pursuing two advertising strategies. Each firm knows that its profits will be affected by its own decision and the decision of the competing firm. The payoff matrix contains the estimated profits for both companies for all possible strategies. Samsung's profits are in the lower (green) triangle of each cell and LG's profits are in the upper (blue) triangle of each cell. Profits (payoffs) are in millions of dollars. Samsung Strategy 1 Strategy 2 strategy 2 Strategy 1 strategy 1 A $150 What is LG's dominant strategy? $300 $150 $25 OLG does not have a dominant strategy. LG B $25 D $75 Strategy 2 $300 $75

Question 1/ LG and Samsung are both releasing a new smartphone at the same time. Each company is fairly well known, and they are both deciding between pursuing two advertising strategies. Each firm knows that its profits will be affected by its own decision and the decision of the competing firm. The payoff matrix contains the estimated profits for both companies for all possible strategies. Samsung's profits are in the lower (green) triangle of each cell and LG's profits are in the upper (blue) triangle of each cell. Profits (payoffs) are in millions of dollars. Samsung Strategy 1 Strategy 2 strategy 2 Strategy 1 strategy 1 A $150 What is LG's dominant strategy? $300 $150 $25 OLG does not have a dominant strategy. LG B $25 D $75 Strategy 2 $300 $75

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Refer to the normal-form game of price competition shown below. Introduce A Do Not Introduce B Clone Do Not Clone (5,5) (-10, 50) (500,0) Firm A must decide whether or not to introduce a new product. If firm A introduces a new product, firm B must decide whether or not to clone the product. The subgame perfect Nash equilibrium to this game is: Firm A plays "Do Not Introduce"; firm B plays "Clone" if firm A plays "Introduce." Firm A plays "Do Not Introduce"; firm B plays "Do Not Clone" if firm A plays "Introduce." Firm A plays "Introduce"; firm B plays "Clone" if firm A plays "Introduce." Firm A plays "Introduce"; firm B plays "Do Not Clone" if firm A plays "Introduce."
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Two technology companies, Bapple and Hoogle, are interested in attracting more software engineers to work and are considering introducing a personal shopper for employees as a new perk. The following game depicts the strategic outcomes that result from the game. Increases in annual profits of the two growing technology companies are shown in the table below. Bapple Offer the new perk Do not offer the new perk A $80 million B $10 million C Hoogle $60 million D $30 million Offer the new perk Hoogle = $20 million Bapple = $30 million Hoogle = $60 million Bapple = $10 million Refer to the Table. If both companies follow a dominant strategy, Bapple's annual profit will grow by Use letters in alphabetical order to select options Do not offer the new perk Hoogle = $5 million Bapple = $80 million Hoogle = $40 million Bapple = $60 million
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