Table 17-13Two home-improvement stores (Lopes and HomeMax) in a growing urban area are interested inexpanding their market share. Both are interested in expanding the size of their store and parking lotto accommodate potential growth in their customer base. The following game depicts the strategicoutcomes that result from the game. Increases in annual profits of the two home-improvementstores are shown in the table below.HomeMaxiIncrease the sizeof store andparking lotDo not increasethe size of storeand parking lotIncrease the size of storeand parking lotLopes $1.0 millionHomeMax $1.5 million.Lopes - $3.2 millionHomeMax - $0.6 millionLopesDo not increase the size ofstore and parking lotLopes - $0.4 millionHomeMax $3.4 million)Lopes $2.00 millionHomeMax $2.5 millionRefer to Table 17-13. Increasing the size of its store and parking lot is a dominant strategy for

A dominant strategy is the optimal strategy for a player among all the competitive strategies no…

Table 17-13 Two home-improvement stores (Lopes and HomeMax) in a growing urban area are interested in expanding their market share. Both are interested in expanding the size of their store and parking lot to accommodate potential growth in their customer base. The following game depicts the strategic outcomes that result from the game. Increases in annual profits of the two home-improvement stores are shown in the table below. HomeMax. Increase the size of store and parking lot Do not increase the size of store and parking lot Increase the size of store and parking lot Lopes - $1.0 million HomeMax - $1.5 million Lopes $3.2 million HomeMax $0.6 million Lopes Do not increase the size of store and parking lot Lopes $0,4 million HomeMax $3.4 million Lopes $2.00 million. HomeMax $2.5 million Refer to Table 17-13. Increasing the size of its store and parking lot is a dominant strategy for

Table 17-13 Two home-improvement stores (Lopes and HomeMax) in a growing urban area are interested in expanding their market share. Both are interested in expanding the size of their store and parking lot to accommodate potential growth in their customer base. The following game depicts the strategic outcomes that result from the game. Increases in annual profits of the two home-improvement stores are shown in the table below. HomeMax. Increase the size of store and parking lot Do not increase the size of store and parking lot Increase the size of store and parking lot Lopes - $1.0 million HomeMax - $1.5 million Lopes $3.2 million HomeMax $0.6 million Lopes Do not increase the size of store and parking lot Lopes $0,4 million HomeMax $3.4 million Lopes $2.00 million. HomeMax $2.5 million Refer to Table 17-13. Increasing the size of its store and parking lot is a dominant strategy for

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

The dropdown options are "Cleans" or "Does not clean." thank you!
!
q19 If you advertise and your rival advertises, you each will earn $4 million in profits. If neither of you advertises, you will each earn $10 million in profits. However, if one of you advertises and the other does not, the firm that advertises will earn $1 million and the non-advertising firm will earn $5 million. If you and your rival plan to be in business for 10 years, then the Nash equilibrium is a. for each firm to not advertise in any year. b. for neither firm to advertise in early years but to advertise in later years. c. for each firm to advertise every year. d. for each firm to advertise in early years but not advertise in later years.
Two oligopolistic aluminium manufacturers are engaged in bitter competition with one another, Both firms, Big Aluminium Giant (BAG) and Little Aluminium Giant (LAG), are deciding whether to expand capacity or not. The table below shows payoffs for the firms under various scenarios. The first number in each cell is the payoff of LAG. Suppose the game is played once and each firm has to make its decision simultaneously. Does BAG have a dominant strategy? Explain clearly. Does LAG have a dominant strategy? Explain clearly. Big Aluminium Giant (BAG) Don't Expand 3, 4 4, 2 Еxpand Little Aluminium Giant Don't Expand 2, 3 Expand 1, 1 For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac).
Suppose that each of two firms in an oligopolistic industry has MC = 8 and together they face P = 68 - 2Q a) If the two firms compete in this market what are P, Q, q1, and q2? b) If the two firms collude what are P, Q, q1, and
Two oligopolistic firms have to decide on the pricing strategy. Each can either choose either a high or a low price. If they both choose a high price, each will make $12 million, but if they both choose a low price, each will make $ 8 million. If one sets a high price and other a low one, the low-priced firm will make $16 million, but the high-priced firm will make only $4 million. It is illegal for each firm to communicate with each other. a) Which strategy would both of them ultimately opt for? b) What would be the pay-off for this strategy?
Dizz Cut price Maintain price Perlis Cut price (-1,-1) A (2,-2) B Maintain price (-2,2) (1,1) D Figure 12 Payoff matrix for two firms in oligopoly Two firms, Perlis and Dizz, produce washing powder in a market characterised by oligopoly. Each firm can increase its market share and profits by cutting its price relative to its rival. However if both firms cut prices they both suffer a fall in profit. This situation may be characterised as a game and Figure 12 shows the payoff matrix for this game. Figure 12 also labels each cell in the payoff matrix with a letter, A, B, C or D. Based on the information in the payoff matrix, decide which cells, if any, correspond to a Nash equilibrium. Select one answer. Select one: O There is no Nash equilibrium O D O A O A and D
3. There are 2 firms that are considering entering a new market. The payoff for each firm that enters is 100/ n where n is the number of firms that enter. The cost of entering is 62. Find all the pure strategy Nash equilibria. Find the mixed strategy equilibrium.
Alcoa and Kaiser, duopolists in the market for primary aluminum ingot, choose prices of their 500 foot rolls of sheet aluminum on the first day of the month. The following payoff table shows their monthly payoffs resulting from the pricing decisions they can make. Suppose Alcoa and Kaiser repeat their pricing decision on the first day of every month. Suppose they have been cooperating for the past few months, but now the manager at Kaiser is trying to decide whether to cheat or to continue cooperating. Kaiser’s manager believes Kaiser can get away with cheating for two months, but he also believes that Kaiser would be punished for the next two months after cheating. After punishment, Kaiser’s manager expects the two firms would return to cooperation. Kaiser’s manager ignores the time-value of money and does not discount future benefits or costs. 4. Suppose you were asked to manage a golf course that was currently charging a uniform price. Would you suggest that the course continue…
Consider the Normal Form Game characterized in the following figure: P1\P2 X Y Z A B с (1,1) (0,0) (-1,0) (0,0) (2,2) (0,0) (0,-1) (0,0) (3,3) Which is the Strictly Dominated Strategy for player 1? O (1,0,0) O (0,1,0) O (0,0,1) There are no strictly dominated strategies for player 1
The Tampa Tribune and the St. Petersburg Times compete for readers in the Tampa Bay market for newspapers. Recently, both newspapers considered changing the prices they charge for their Sunday editions. Suppose they considered the following payoff table for making a simultaneous decision to charge either a low price of $0.50 or a high price of $1.00. Tampa’s profits are shown in regular type. St. Petersburg’s profits are shown in bold. 1. Tampa Tribune's dominant strategy is ____________ (low price, high price, it has no dominant strategy).
15-3 Compatibility Microsoft and a smaller rival often have to select from one of two competing technologies. The rival always prefers to select the same technology as Microsoft (because compatibility is important), while Microsoft always wants to select a different technology from its rival. Describe the equilibrium of this game.