The payoff matrix presents the profits for Firms X and Y under their two individual pricing strategies. Suppose both firms have agreed to maximize their combined profits by colluding on their pricing strategies. Use the information in this payoff matrix to answer the two questions. Firm Y strategy Low price Firm X strategy $ 18 Low price Firm X Profit=71 Firm Y Profit = 71 Firm X Profit = 105 Firm Y Profit = 49 High price Firm X Profit = 49 Firm Y Profit = 105 Firm X Profit = 87 Firm Y Profit = 87 High price Compare the profits of Firm X when both firms respect the collusive agreement to the profits of Firm X when Firm X secretly cheats on the agreement. How much additional profit would Firm X earn by secretly cheating on the agreement to collude? Round your answer to the nearest whole number. Compare the profits of Firm Y when both firms respect the collusive agreement to the profits of Firm Y when both firms cheat on the agreement. By how much would the profits of Firm Y fall if both firms cheat on the agreement to collude? Round your answer to the nearest whole number.

The payoff matrix presents the profits for Firms X and Y under their two individual pricing strategies. Suppose both firms have agreed to maximize their combined profits by colluding on their pricing strategies. Use the information in this payoff matrix to answer the two questions. Firm Y strategy Low price Firm X strategy $ 18 Low price Firm X Profit=71 Firm Y Profit = 71 Firm X Profit = 105 Firm Y Profit = 49 High price Firm X Profit = 49 Firm Y Profit = 105 Firm X Profit = 87 Firm Y Profit = 87 High price Compare the profits of Firm X when both firms respect the collusive agreement to the profits of Firm X when Firm X secretly cheats on the agreement. How much additional profit would Firm X earn by secretly cheating on the agreement to collude? Round your answer to the nearest whole number. Compare the profits of Firm Y when both firms respect the collusive agreement to the profits of Firm Y when both firms cheat on the agreement. By how much would the profits of Firm Y fall if both firms cheat on the agreement to collude? Round your answer to the nearest whole number.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question 1