The payoff matrix below shows the possible actions and payoffs of Walmart and Target with respect to a particular product. Thenon-cooperative solution occurs when:TargetPrice HighPrice Low$40Price High$40Price Low$50$15$50$15$30$30[15.4.1 Decisions, Decisions-What Price to Charge?]A Walmart prices low and Target prices high.BWalmart and Target both price high.Walmart prices high and Target prices low..Walmart and Target both price low.Last saved 8:33:38 PMSubmit

When Target sets price high, then Walmart has more payoff in price low.And when Target sets price…

Answered: The payoff matrix below shows the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Macmillan Learning You notice that the prices of coffee at your local supermarket vary from week to week, causing you to buy different brands, depending on which is cheaper that week. Your friend William, by contrast, is a hardcore Peet's fan and buys only Peet's, whether the price is $5.99 per pound or $12.99 per pound. By varying coffee prices, the supermarket sells both to you, who is relatively price particular about coffee, and to William, who is relatively price and and particular about coffee. O sensitive; less; insensitive; more insensitive; more; sensitive; less sensitive; more; insensitive; less insensitive; less; sensitive; more Incorrect
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. 5. This newspaper pricing decision ________ (is, is not) a Prisoners' Dilemma.
Suppose Mattel, the producer of Barbie dolls and accessories (sold separately), has two types of consumers who purchase its dolls: low-value consumers and high-value consumers. Each of the low-value consumers tends to purchase one doll and one accessory, with a total willingness to pay of $60. Each of the high-value consumers buys one doll and two accessories and is willing to pay $114 in total. Mattel is currently considering two pricing strategies: Strategy 1: Sell each doll for $30 and each accessory for $301 Strategy 2: Sell each doll for $6 and each accessory for $54 In the following table, indicate the revenue for a low-value and a high-value customer under strategy 1 and strategy 2. Then, assuming each strategy is applied to one low-value and one high-value customer, indicate the total revenue for each strategy. Strategy 1 $30 doll + $30 accessory Strategy 2 $6 doll + $54 accessory Revenue from Low-Value Customers $60 Value, 1 Accessory ($) $ $ The strategy that generates the…
Two firms produce identical products at zero cost, and theycompete by setting prices. If each firm charges a low price,then both firms earn profits of zero. If each firm charges ahigh price, then each firm earns profits of £30. If one firmcharges a high price and the other firm charges a low price,the firm that charges the lower price earns profits of £50, andthe firm charging the higher price earns profits of zero. (a) Which oligopoly model best describes this situation?(b) Write this game in normal form.(c) Suppose the game is infinitely repeated. Can theplayers sustain the "collusive outcome" as a Nashequilibrium if the interest rate is 50 percent? Explain. Please answer the a, b and c parts.
Suppose you are trying to determine the pricing for popcorn at a movie theater. There are just two types of customers (for simplicity assume just two total customers). One customer has a low demand for popcorn and will pay $1.00 for 16 oz of popcorn and nothing for a second 16oz. The high demand customer will pay $1.25 for the first 16oz and $0.50 for the second 16oz. If you charge one price for every 16oz a customer buys, what would you charge?
A computer hardware firm sells both laptop computers and printers. Their pricing team determines that there are 3 types of customers with the following willingness to pay: Laptop Printer Customer Type A $800 $100 $900 Customer Type B $1,000 $50 $1050 Customer Type C $600 $150 $750 If the firm were to change only individual prices, what prices should it charge for its laptops and printers? Assume for simplicity that the firm has only 1 customer of each type and that incremental costs for laptops and printers = $0. How much profit does the firm earn? How much consumer surplus will there be?
Table A shows the pricing options for two drone operators, Andrew and Jasmine, as an oligopoly in a local market. Which of the following pricing strategy scenarios does Table 2 depict, when there are at least two pricing periods expected? Table A Drone Operator Jasmine LOW Price Drone Operator Jasmine HIGH Price Drone Operator Andrew LOW Price Andrew Low Jasmine Low Drone Operator Andrew Charges LOW Price: gets $1,000 profit Drone Operator Jasmine Charges LOW Price: gets $1,000 profit Drone Operator Andrew Charges LOW Price: gets $2,000 profit Drone Operator Jasmine Charges HIGH Price: gets $0 profit Table 2 Pricing Strategy Scenario TABLE 2 First Period First Price Choice Period (High or Profit Low) $1,000 $1,000 Drone Operator Andrew HIGH Price Drone Operator Andrew Charges HIGH Price: gets $0 profit Drone Operator Jasmine Charges LOW Price: gets $2,000 profit Drone Operator Andrew Charges HIGH Price: gets $1,500 profit Drone Operator Jasmine Charges HIGH Price: gets $1,500 profit…
9: Suppose there are two restaurants on an island, Ace's (A) and Betty's (B). They both have to decide how many meals, qa and qB, to sell per day. For Q = qA + ¶B, the market demand function for meals is p = 120 – Q || Both restaurants face a marginal cost per meal of $30. (1) Find the Cournot equilibrium quantities and prices. (2) What if the restaurants decide to form a cartel and split the production and profits evenly. How much will each firm produce and what price do they charge? (3) Suppose they competed with prices instead of quantities. Find the Bertrand equilibrium quantities and prices. (4) Find the deadweight loss of Cournot competition, Bertrand competition, and of the cartel outcome. Then rank each of these from least deadweight loss to most deadweight loss. For the rest of the problem, assume firms compete in quantities (Cournot) and there is no cartel. (5) Suppose Betty's marginal cost per meal increases to $60. Ace's marginal cost remains at $30. What are the new…
3. Suppose that two clothing manufacturers, Lands' End and L.L. Bean, are deciding what price to charge for very similar field coats. The cost of producing these coats is $100. The coats are very close substitutes, so customers flock to the seller that offers the lowest price. If both firms offer identical prices, each receives half the customers. For simplicity, assume that the two firms have the choice of pricing at prices of $103, $102, or $101. The profit each firm would earn at various prices (Lands' Ends Profit, LL Bean's Profit) is shown in the payoff matrix below. a. LL Bean $102 $103 ($150, $103 ($0, $200) -A $150) Lands' End $102 ($200, $0) ($100, $100) $101 ($120, $0) ($120, $0) What is the Nash equilibrium and expected profits to LL Bean and Lands' End of this game? $101 ($0, $120) ($0, $120) ($50, $50) b. Suppose this is a mixed strategy game in which LL Bean has a 25% percent chance of choosing a price of $101, a 25% chance of choosing price of $102, and a 50% chance of…
Suppose that there were two competing types of high-definition DVD players, Greenbeam and Mosdef. Greenbeam enjoyed an initial advantage in the market for high-definition DVD players because there were more motion-picture production companies offering movies compatible with its system. Which of the following is an illustration of a network externality? Mosdef benefited from more consumers buying Greenbeam DVD players. O Consumers bought Mosdef players in increasing numbers, while Greenbeam lost market share and eventually went out of business. Consumers bought Greenbeam players in increasing numbers, while Mosdef lost market share and eventually went out of business. More production companies adopted the Mosdef format for their movies because the Mosdef player had the superior format, despite the fact that more consumers purchased Greenbeam players.
Consider two restaurants located next door to each other: Quick Burger and The Sunshine Café. If Quick Burger opens a drive-through window, the increased traffic and noise will bother customers seated outside at The Sunshine Café. The accompanying table shows the monthly payoffs to Quick Burger and The Sunshine Café when Quick Burger does and does not operate a drive-through window. Quick Burger Operates aDrive-Through Window Quick Burger Does NotOperate Drive-Through Window Quick Burger $ 24,000 $ 12,000 The Sunshine Café $ 15,000 $ 23,000 Suppose Quick Burger has the legal right to operate a drive-through window, and Quick Burger and the Sunshine Café can negotiate with each other at no cost. Which of the following arrangements would lead to the socially optimal outcome? Multiple Choice Quick Burger pays The Sunshine Cafe $10,000 to operate the drive-through window. Quick Burger pays The Sunshine Cafe $12,750 to operate the drive-through window.…
3) Amazon and Target both sell the new Xbox, and have a choice whether to charge a high price or a low price. The payoff matrix identifies the profit either store can expect to make (in millions of dollars). Walmart High Price Low Price High Price b. Identify the Nash Equilibrium. 3,6 5,5 Amazon Low Price 2.8 4.3 a. Identify the Dominant Strategy for either player, or write "none" if there isn't one.

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