60A- What is the dominant strategy for Firm B? What is the dominant strategy for Firm A? Explain Social InteractionsConsider two companies who advertise to attract the same customers. If neither company advertises the companies split the market. If both advertise they also split the market, but profits arelower, since each company must spend on advertising. But if one company advertises and the other does not, the one that advertises attracts customers from the other. The game isrepresented in the following table:Firm BAdvertiseDon't AdvertiseAdvertiseFirm A gets $3 MFirm A gets $5 MFirm AFirm B gets $3 MFirm B gets $2 MDon't AdvertiseFirm A get $2 MFirm A gets $4 MFirm B gets $5 MFirm B gets $4 M

The dominant strategy, according to game theory, is the best action for an individual regardless of…

Answered: Social Interactions Consider two…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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5 A firm which is the only supplier in an industry is dominating the market through its market power. With the help of a diagram examine how such action would lead to market failure.
8.In 2019, competition authorities threw out a merger of Asda and Sainsbury’s. What type of growth would the merger of Asda and Sainsbury’s have represented? a) Horizontal expansion b) Horizontal integration c) Conglomerate merger d) Vertical integration e) Horizontal alliance
4. By using pay off matrix that shows profit of the firms below, find that is there a any dominant strategy for firm A and firm B. Show the result Firm B Advertise Not Advertise Advertise 20 10 30 Not Advertise 12 16 40 Firm A
5. The following problem was first considered by John von Neumann and is a fundamentalresult game theory.A and B play the following game:A writes down either number 1 or number 2, and B must guess which one.If the number that A has written down is i and B has guessed correctly, B receives i units from A.If B makes a wrong guess, B pays 4/5 of a unit to A.First we consider the expected gain of player B.Suppose B guesses 1 with probability p and 2 with probability 1 −p.Let X1 denote B’s gain (or loss) in a game where A has written down 1.Let X2 denote B’s gain (or loss) in a game where A has written down 2.(a) Find the pmf of X1 and X2(b) Find B’s expected gain for these two cases, E[X1] and E[X2].(c) What value of p maximizes the minimum possible value of B’s expected gain?Now consider the expected loss of player ASuppose that A writes down 1 with probability q and 2 with probability 1 −q.Let Y1 be A’s loss (or gain) if B chooses number 1.Let Y2 be A’s loss (or gain) if B…
2. What are the behavioral assumptions in oligopoly that lead to an individual oligopolist firm facing a kinked demand curve? What's the key take-away of the kinked oligopoly model?
UofC Aggressive Restrained Aggressive 18, 26 29,47 MRU Restrained 45, 59 32, 23 Consider the case of a Sequential-Move game. Uofc moves First Part 1. Is UofC 's sub-game Perfect Nash Equilibrium strategy Aggressive or Restrained? (Answer 1 for aggressive and 2 for Restrained) 1 Part 2. Is MRU's sub-game Perfect Nash Equilibrium strategy Aggressive or Restrained? (Answer 1 for aggressive and 2 for Restrained) Number: Part 3. How much profit does UofC make under the Sub-game perfect Nash-Equilibrium? Number Part 4. How much profit does MRU make under the Sub-game perfect Nash-Equilibrium? Number
5. For the strategic form game shown, derive the strategies that survive the IDSDS. Player 2 y 5,2 3,4 2,1 4,4 3,2 3,3 Player 1 3,5 4,4 0,4 2,3 1,5 3,0
1. The table below shows the percentage of sales held by the four largest firms in an industry. Company A B C D Market share (percent of sales) 12 10 5 3 a) Calculate this industry's four-firm concentration ratio. b) Is this industry competitive? why? c) What market type does it most likely represent?
2. Which of the following is not characteristic of a cartel situation? (a) While disagreement over production quotas may occur, once set, there is little incentive for cheating. (b) Consumer surplus under a cartel is smaller relative to the competitive case. (c) Market entry of new producers is a threat to the cartel's viability. (d) High long-run demand elasticity can pose an obstacle to the cartel's success. (e) The output produced by a cartel will be less than the output produced on a competitive market.
11. Game theory terminology Complete the following table by selecting the term best described by each definition. A set of strategies (one for each player) in which each player's strategy is the best option for that player, given the chosen strategy of the player's opponents A strategy in which a player cooperates until the other player defects and then defects until the other player cooperates again The event that occurs when agents in a game form an agreement about which strategies to implement Tit-for- Definition Payoff Matrix Dominant Strategy Nash tat Prisoners' Dilemma Equilibrium Strategy Game Collusion A player's best choice, if it exists, regardless of their opponent's strategy O O O O O O O O O O
Figure B Boeing (B) High Price A: $50 B: - $10 Low Price Low A: $5 Price Airbus (A) High Price B: $4 A: - $10 B: $40 A: $40 B: $30 [MUST SHOW ROUGH WORK] Figure B shows the payoffs in terms of economic profits for Airbus and Boeing in billions of dollars. Each company has two strategies: (1) charge a low price or (2) charge a high price. In a Nash equilibrium, what are the economic profits of Boeing? Select one: A. - $10 billion O B. $40 billion C. $4 billion D. $5 billion O E. $30 billion
19 What role does advertising play with respect to differentiated products? A Shaping consumers' intangible preferences BO Allowing a firm to sell any quantity it wishes Shaping perceived demand for a price taker DO Allowing a firm to raise the prevailing market price

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