Question 3Suppose the table below represents the payoff matrix for two firms in duopoly, who are"noncooperative." Which one of the following statements is true?Firm A AdvertiseFirm BFirm BAdvertiseNo AdvertisingLow profitHigh profitLow profitLossNoLossModerate profitFirm AAdvertisingHigh profitModerate profitIf both firms choose the same strategy they will both earn a loss.Firm A will choose to advertise because it guarantees a high profit.The firms will collude.Choosing not to advertise would make Firm B better off, regardless of what Firm A does, than wouldchoosing to advertise.Choosing to advertise would make Firm A better off, regardless of what Firm B does, than wouldchoosing not to advertise.

When two businesses compete in the same market under a duopoly, their advertising strategies can…

Answered: Question 3 Suppose the table below…

Principles of Microeconomics (MindTap Course List)

8th Edition

ISBN:9781305971493

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter17: Oligopoly

Section: Chapter Questions

Problem 5PA

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Sometimes oligopolies in the same industry are very different in size. Suppose we have a duopoly where one firm (Film A) is large and the other film (Film B) is small, as the prisoners dilemma box in Table 10.4 shows. Assuming that both films know the payoffs, what is the likely outcome in this case?
The payoff matrix below is for two firms, A and B, deciding the quantity of their output levels. What is the dominant strategy of each firm? icrosc Firm B Strategy High output Low output High output 100, 80 0, 125 Firm A Low output 65, 0 40, 65 Both firms produce low levels of output. DO cGill Both firms produce high levels of output. Temp Firm A's dominant strategy is to produce low levels of output, but Firm B does not have a dominant strategy. Order Article O Firm B's dominant strategy is to produce low levels of output, but Firm A does not have a dominant strategy. Neither firm has a dominant strategy. oy 00 halysis
◄ Search 12:47 PM Sun Nov 12 ← Note Nov 12, 2023 Uptown's price strategy The Nash equilibrium occurs when High Low LED RareAir's price strategy High $12 $15 The more favorable outcome would be for $12 Tt ✪ $6 B Low $6 D $8. $15 $8 S O both firms have an incentive to deviate from this strategy given the strategy of the competing firm. It is shown by the dominant strategy of cell A. 92% neither firm has an incentive to deviate from this strategy given the strategy of the competing firm. It is shown by the dominant strategy of cell D. O one firm consistently has an incentive to deviate from this strategy given the strategy of the competing firm. It is shown by the high-price strategy of cell B. O one firm consistently has an incentive to deviate from this strategy given the strategy of the competing firm. It is shown by the high-price strategy of cell C. O the firms to collude and use the high-price strategy but this strategy requires cooperation. O one firm to take the lead and let the…
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Is this strategy a sub-game perfect Nash Equilibrium? Player 2: a c e Player 1: A DE C 2 True False A d B e a 2 1 2 1 A D E חח 0 0 1 F -1 1000
12. To advertise or not to advertise Suppose that two firms, Hatte Latte and Bean Bruuer, are the only sellers of espresso in some hypothetical market. The following payoff matrix gives the profit (in millions of dollars) earned by each company depending on whether or not it chooses to advertise: Bean Bruuer Advertise Doesn't Advertise Advertise Hatte Latte Doesn't Advertise 9,9 3,15 15,3 11, 11 For example, the lower left cell of the matrix shows that if Bean Bruuer advertises and Hatte Latte does not advertise, Bean Bruuer will make a profit of $15 million, and Hatte Latte will make a profit of $3 million. Assume this is a simultaneous game and that Hatte Latte and Bean Bruuer are both profit-maximizing firms. If Hatte Latte chooses to advertise, it will earn a profit of $ does not advertise. million if Bean Bruuer advertises and a profit of $ million if Bean Bruuer If Hatte Latte chooses not to advertise, it will earn a profit of $ does not advertise. million if Bean Bruuer…
mall Dynaco Jains Pynaco gains 4. Synergy and Dynaco are the only two firms in a specific high - tech industry. They face the following payoff matrix as they determine the size of their research budget: Synergy's Deeision Small Bodget Lange Budget Synergy gain $420M Symedgy Dynaco ins Large budget Dynaro gains $30M Synergy Small Dynaco Jains Budget Jains zero Dynae's 2ero gains $70m Synergy Pynaco gains gains #50M Decision a. Does Synergy have a dominant strategy? Explain. b. Does Dynaco have a dominant strategy? Explain. c. Is there a Nash equilibrium for this scenario? Explain. (Hint: Look closely at the definition of Nash equilibrium.)
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Save Answer Consider two cigarette companies, PM Inc. and Brown Inc. If neither company advertises, the two companies spit the market and earn $60 million each. If they both advertise, they again split the market, but profits are lower by $20 million since each company must bear the cost of advertisirlg. Yet if one company advertises while the other does not, the one that advertises attracts customers from the other. In this case, the company that advertises earns $70 million while the company that does not advertise earns only $30 million. What will these two companies do if they behave as individual profit maximizers? Neither company will advertise, and PM Inc. earns $60. One company will advertise, the other will not. Brown Inc. earns $70. Both companies will advertise, and PM Inc. earns $40. Both companies will advertise, and PM Inc. earns $60.
Consider the payoff matrix of Hulu and Netflix. Why don't both firms just raise prices? NETFLIX HULU 15, 15 8, 20 20, 8 10, 10 O It is in each firm's profitable interest to lower prices, no matter what the other competitor does. O Raising prices is illegal in this case. O Firms are concerned about a third competitor entering at higher prices. O Higher prices will increase the number of customers beyond what the firms can handle.

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