Scenario: Payoff Matrix for Firms X and YThe following payoff matrix depicts the profits for the only two firmsin this oligopolistic industry.Firm YHigh PriceFirm X's profit: $1,800Firm Y's profit: $2,800Firm X's profit: $2,000Firm Y's profit: $2,400Low PriceFirm X's profit: $1,600Firm Y's profit: $2,500Firm X's profit: $1800Firm Y's profit: $2,200Low PriceFirm XHigh PriceReference: Ref 14-22(Scenario: Payoff Matrix for Firms X and Y) In the scenario PayoffMatrix for Firms X and Y, if firm X and firm Y wish to maximize jointprofit:X chooses Low Price and Y chooses Low Price, i.e L, LH, LO X chooses Low Price and Y chooses High Price, i.e L, HН, Н

Oligopolistic industry:- An oligopoly is a market structure in which a small number of enterprises…

Scenario: Payoff Matrix for Firms X and Y The following payoff matrix depicts the profits for the only two firms in this oligopolistic industry. Firm Y High Price Firm X's profit: $1,800 Firm Y's profit: $2,800 Firm X's profit: $2,000 Firm Y's profit: $2,400 Low Price Low Price Firm X's profit: $1,600 Firm Y's profit: $2,500 Firm X's profit: $1800 Firm Y's profit: $2,200 Firm X High Price Reference: Ref 14-22 (Scenario: Payoff Matrix for Firms X and Y) In the scenario Payoff Matrix for Firms X and Y, if firm X and firm Y wish to maximize joint profit: X chooses Low Price and Y chooses Low Price, i.e L, L Н, L X chooses Low Price and Y chooses High Price, i.e L, H O H, H

Scenario: Payoff Matrix for Firms X and Y The following payoff matrix depicts the profits for the only two firms in this oligopolistic industry. Firm Y High Price Firm X's profit: $1,800 Firm Y's profit: $2,800 Firm X's profit: $2,000 Firm Y's profit: $2,400 Low Price Low Price Firm X's profit: $1,600 Firm Y's profit: $2,500 Firm X's profit: $1800 Firm Y's profit: $2,200 Firm X High Price Reference: Ref 14-22 (Scenario: Payoff Matrix for Firms X and Y) In the scenario Payoff Matrix for Firms X and Y, if firm X and firm Y wish to maximize joint profit: X chooses Low Price and Y chooses Low Price, i.e L, L Н, L X chooses Low Price and Y chooses High Price, i.e L, H O H, H

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

A small town has a duopoly in its tattoo market. Two firms, "Thread the Needle" and "Ink about it" are both competitors. Daily profit is listed in the payoff matrix. The green payouts belong to "Thread the Needle" and the red, "Ink about it". In this game, what is the Nash Equilibrium? A Thread the Needle: don't advertise, Ink about it: don't advertise B Thread the Needle: don't advertise, Ink about it: advertise C Thread the Needle: advertise, Ink about it: advertise D Thread the Needle: advertise, Ink about it: don't advertise
Assume that Acme and Gamma are the two main rivals in the market for hair dryers. Each firm is considering prices of $50 or $60, with the following possible profit outcomes: Gamma Price = 50 Price = 60 Price = 50 40, 45 45, 42 Acme Price = 60 24, 55 30, 48 A) Assume the firms choose prices simultaneously. Does the game have a solution? Explain. B) Is the solution you have identified a Nash Equilibrium? Explain why or why not.
Alpha's Price Policy C B D High A Low A Beta's Price Policy High $20 $20 C B $30 Low $30 $10 D $10 Based on the profit matrix above, what is the outcome of the game if Alpha and Beta collude? $15 $15
For the remaining questions consider two gas stations competing as an oligopoly. There are the only two gas stations in a small town. Each week they must simultaneously display their prices choosing between a high price and a low price. The payoff matrix below displays the weekly profits earned by the gas stations if they choose the various prices. Chevron Decisions. High Price Low Price S: $5,000 S: $1,000 High Price C: $5,500 C: $8,000 Shell Decisions S: $7,500 S: $3,000 Low Price C: $1,500 C: $2,800 (a) If Shell knows Chevron will choose the HIGH PRICE, what price should Shell choose? [ Select] (b) If Shell knows Chevron will choose the LOW PRICE, what price should Shell choose? [Select] (c) Does Shell have a dominant strategy? If so, what is it? [Select] V (d) If Chevron knows Shell will choose the HIGH PRICE, what price should Chevron choose? [Select] V (e) If Chevron knows Shell will choose the LOW PRICE, what price should Chevron choose? [Select] (f) Does Chevron have a dominant…
Question 1 An industry consists of two firms. The demand function for the product of firm i is q = 24 - 5p; + 2pj. The marginal cost of production for each firm is zero. Find the Nash equilibrium in prices if the game is non-repeated and firms choose their prices simultaneously.
Please help me this is the completed question
In a Nash - Cournot equilibrium, does an oligopolistic firm produce at less than full capacity, full capacity, or more than full capacity? Explain.
Payoff Matrix I for Blue Spring and Purple Rain Purple Rain Low Price High Price $40, $39 $-20, $100 Blue Spring High Price Low Price $100, $14 $20, $20 The figure Payoff Matrix I for Blue Spring and Purple Rain refers to two producers of bottled water. Each has two strategies available to it: a high price and a low price. The dominant strategy for Purple Rain is to: charge a low price. charge a high price. O None of these options is correct. O adopt the same strategy as Blue Spring. O Purple Rain does not have a dominant strategy.
Consider the following oligopolistic market. In the first stage, Firm 1 chooses quantity q₁. Firms 2 and 3 observe Firm 1's choice, and then proceed to simultaneously choose q2 and 93, respectively. Market demand is given by p(Q) = 100 – Q, and Q = 9₁ +9₂ +93. Firm 1's costs are c₁ (9₁) = 1q₁, firm 2's costs are c₂(9₂) = 6q2 and firm 3's costs are C3(93) = 693. Starting from the end of the game, you can express Firm 2's best response function in terms of 9₁ and 93, and you can similarly express Firm 3's best response function in terms of q₁ and q₂. Using these, answer the following questions. a) If Firm 1 chooses q₁ = 9, what quantity will Firm 2 choose? b) If Firm 1 chooses q₁ = 100, what quantity will Firm 2 choose? c) In the subgame perfect Nash equilibrium of this game, firm 1 produces what quantity? d) In the subgame perfect Nash equilibrium of this game, firm 2 and firm 3 each produce what quantity?
. OPEC, the Organization of Petroleum Exporting Countries, was founded in 1969. Their original objective was to form a cartel to increase the price that they receive for their oil exports. Create a prisoner’s dilemma type game for two large members of OPEC (e.g. Saudi Arabia and Indonesia). Create numbers, where payoffs are total annual oil export revenues for each of these two countries. Verbally explain how you got your numbers. Find the Nash equilibrium. Based on this model, what strategy is in the oil exporters’ best interest (Nash or otherwise)? How do they make it happen? Create another prisoner’s dilemmamodel for all of OPEC on one side, and all non OPEC oil exporting nations on the other side. Create numbers, where payoffs are total annual oil export revenues for each of the two sides. Verbally explain how you created your numbers. Also create your numbers applying the fact that OPEC’s total production capacity is greater than total non OPEC exports…
The oligopoly market structure is characterized by several defining qualities on of which is either similar or identical characteristics, which others describe the oligopolistic market structure.
Part 2: First Long Question There are two French bakeries in a small town: Le Meilleur Croissant (C), owned by Camille, and Le Meilleur Pain Au Chocolat (P), owned by Paul. In each period of an infinitely repeated game, they compete a la Bertrand, with market demand given by Q(pmin) = 10 - Pmin- Even though they sell identical goods, they have different marginal costs: cc = 2 and %3D Cp = 4 (Paul bakes just as well but is bad at business decisions). There are no fixed costs. Question 6 Turns out that Camille and Paul are married, and so they choose prices to maximize the joint profits of the two firms. Because both love baking and love each other, they also jointly decide that both firms should be selling positive amounts in their optimal plan. What prices do they choose? Pc = 6, pp = 11 Pc = 6.5, pp = 6.5 Pc = 6, pp = 6 Pc = 7, pp = 7 %3D O pc = 6, pp = 7