5. To advertise or not to advertiseSuppose that two firms, Frankencakes and Thinley's, are the only sellers of crepes in some hypothetical market. The following payoff matrix gives theprofit (in millions of dollars) earned by each company depending on whether or not it chooses to advertise:FrankencakesThinley'sAdvertise Doesn't AdvertiseAdvertise9,9Doesn't Advertise 3,15For example, the lower left cell of the matrix shows that if Thinley's advertises and Frankencakes does not advertise, Thinley's will make a profit of $15million, and Frankencakes will make a profit of $3 million. Assume this is a simultaneous game and that Frankencakes and Thinley's are both profit-maximizing firms.advertiseIf Frankencakes chooses to advertise, it will earn a profit of 515,311.11If Frankencakes chooses not to advertise, it will earn a profit of Snot advertise.Both firms will choose to advertiseO Both firms will choose not to advertise.million if Thinley's advertises and a profit of 5Both firms will choose not to advertise,Both firms will choose to advertisemillion if Thinley's advertises and a profit of 5million if Thinley's does not.If Thinley's advertises, Frankencakes makes a higher profit if it choosesIf Thinkey's doesn't advertise, Frankencakes makes a higher profit if it choosesSuppose that both firms start off by deciding not to advertise. If the firms act independently, what strategies will they end up choosing?O Frankencakes will choose not to advertise and Thinley's will choose to advertiseFrankencakes will choose to advertise and Thinley's will choose not to advertisemillion if Thinley's doesAgain, suppose that both firms start off not advertising. If the firms decide to collude, what strategies will they end up choosing?Frankencakes will choose to advertise and Thinley's will choose not to advertiseO Frankencakes will choose not to advertise and Thinley's will choose to advertise

Pay-off matrix: There are 2 players: Frankecakes and Thinleys. Strategy set: {Advertise, Does not…

Suppose that two firms, Frankencakes and Thinley's, are the only sellers of crepes 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: Frankencakes Advertise Thinley's Advertise Doesnt Advertise Doesn't Advertise 3,15 15,3 11, 11 For example, the lower left cell of the matrix shows that it Thinley's advertises and Frankencakes does not advertise, Thinley's will make a profit of $15 million and Frankencakes will make a profit of $1 million. Assume this is a simultaneous name and that Frankencakes and Thinley's are both profit

Suppose that two firms, Frankencakes and Thinley's, are the only sellers of crepes 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: Frankencakes Advertise Thinley's Advertise Doesnt Advertise Doesn't Advertise 3,15 15,3 11, 11 For example, the lower left cell of the matrix shows that it Thinley's advertises and Frankencakes does not advertise, Thinley's will make a profit of $15 million and Frankencakes will make a profit of $1 million. Assume this is a simultaneous name and that Frankencakes and Thinley's are both profit

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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◄ 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…
QUESTION 13 Consider a market where two firms (1 and 2) produce differentiated goods and compete in prices. The demand for firm 1 is given by D₁(P₁, P2) = 140 - 2p1 + P2 and demand for firm 2's product is D2 (P1, P2) 140 - 2p2 + P1 Both firms have a constant marginal cost of 20. What is the Nash equilibrium price of firm 1? (Only give a full number; if necessary, round to the lower integer; no dollar sign.)
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MCQ 26 In game theory, a dominant strategy can best be described as: A a strategy played by a dominant firm to raise its market share В a strategy played by a firm to dominate its rivals C I do not want to answer this question. D all the answers to this question are correct E a strategy that leaves every player in a game better off F a strategy that is optimal for a player, irrespective of what the other players do
For example, the lower left cell of the matrix shows that if Full Coop advertises and Lucky Bird does not advertise, Full Coop will make a profit of $14 million, and Lucky Bird will make a profit of $3 million. Assume this is a simultaneous game and that Lucky Bird and Full Coop are both profit- maximizing firms. If Lucky Bird chooses to advertise, it will earn a profit of $ advertise. million if Full Coop advertises and a profit of $ million if Full Coop does not If Lucky Bird chooses not to advertise, it will earn a profit of $ not advertise. million if Full Coop advertises and a profit of $ million if Full Coop does S If Full Coop advertises, Lucky Bird makes a higher profit if it chooses If Full Coop doesn't advertise, Lucky Bird makes a higher profit if it chooses Suppose that both firms start off by deciding not to advertise. If the firms act independently, what strategies will they end up choosing? Both firms will choose not to advertise. O Lucky Bird will choose not to…
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MCQ 27 Consider the following game in which two firms (OLD and NEW) are considering whether or not to advertise to increase sales. Each firm knows that the impact on profits depends on what the other firm chooses to do. The possible profit outcomes of the game are shown below, with OLD's profits shown as the first number in each pair and NEW's profits shown as the second number: NEW Advertise Not Advertise Advertise 10, 5 15, 1 OLD Not Advertise 5, 8 20, 3 Assuming the firms aim to earn as much profit as possible, which of the following is TRUE for the game? A I do not want to answer this question. OLD's dominant strategy is to advertise C OLD's dominant strategy is not to advertise NEW's dominant strategy is not to advertise E NEW's dominant strategy is to advertise F the dominant strategy for both OLD and NEW is to advertise
Assume that the market for oil is made up of two firms: Exxon Mobil and Chevron. Also assume that New England has dozens of breweries and each of these make beers with different tastes, colors, and aromas. Which of the following statements is true? The market structure for oil is an oligopoly, and the one for beer is monopolistic competition. The market structure for oil is monopolistic competition, and the one for beer is an oligopoly. The market structure for both oil and beer is an oligopoly. The market structure for both oil and beer is monopolistic competition.
There are two firms in the market (duopoly). These two firms are competingsimultaneously. The first firm chooses its output level (x) by predicting the second firm’soutput (y). Let c denote the total cost function c(x) = x and c(y) = y. Also, let’s assumethat the inverse demand function is p(Y) = 7 - Y where Y = x + y. (1) Obtain the reactionfunction of the first firm. (2) Find the equilibrium (output and profit of each firm) whentwo firms simultaneously compete
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