The table shows the payoff matrix for two firms operating a zipline duopoly in a resorttown. If the firms decide to compete, industry profits equal and both firms would offerFirm X's strategiesrides each.100 rides60 ridesO A. $9,000; 60O B. $5,000; 60$3,000$1,000OC. $9,000; 100100 ridesO D. $10,000; 320$3,000$6,000O E. $6,000; 100Firm Y's strategies$6,000$5,00060 rides$1,000$5,000Next

A duopoly is a market structure where there are only two dominant firms that control a particular…

The table shows the payoff matrix for two firms operating a zipline duopoly in a resort town. If the firms decide to compete, industry profits equal and both firms would offer rides each. Firm X's strategies 100 rides 60 rides O A. $9,0003; 60 O B. $5,000; 60 $3,000 $1,000 OC. $9,000; 100 100 rides O D. $10,000; 320 $3,000 $6,000 O E. $6,000; 100 Firm Y's strategies $6,000 $5,000 60 rides $1,000 $5,000

The table shows the payoff matrix for two firms operating a zipline duopoly in a resort town. If the firms decide to compete, industry profits equal and both firms would offer rides each. Firm X's strategies 100 rides 60 rides O A. $9,0003; 60 O B. $5,000; 60 $3,000 $1,000 OC. $9,000; 100 100 rides O D. $10,000; 320 $3,000 $6,000 O E. $6,000; 100 Firm Y's strategies $6,000 $5,000 60 rides $1,000 $5,000

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter17: Oligopoly

Section: Chapter Questions

Problem 2CQQ

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Consider the curve in the figure below, which shows the market demand. marginal cost, and marginal revenue curve for firms in an oligopolistic industry. In this example, we assume firms have zero fixed costs. Suppose the firms collude to form a cartel. What price will the cartel charge? What quantity will the cartel supply? How much profit will the cartel earn? Suppose now that the cane] breaks up and the oligopolistic firms compete as vigorously as possible by cutting the price and increasing sales. What will be the industry quantity and price? What will be the collective profits of all firms in the industry? Compare the equilibrium price, quantity, and profit for the cartel and cutthroat competition outcomes.
Sometimes oligopolies in the same industry are very different in size. Suppose we have a duopoly where one firm (Film A) is large and the other film (Film B) is small, as the prisoners dilemma box in Table 10.4 shows. Assuming that both films know the payoffs, what is the likely outcome in this case?
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The graph below shows a demand curve for a firm operating in an oligopolistic market. Kinked Demand Price 100 90 80 70 MC 60 50 40 30 20 10 MR D 10 20 30 40 60 70 80 90 100 Quantity Compared to a price of $75, at a price of $60 demand is O relatively more elastic. O relatively more inelastic. O perfectly elastic. O perfectly inelastic.
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Ma3. You operate in a duopoly in which you and a rival must simultaneously decide what price to charge for the same homogeneous product. Assume each you and your rival can choose a “low price” or a “high price”. If you each charge a low price, you each earn zero profits. If you each charge a high price, you each earn profits of $3 million. If you charge different prices, the one charging the high price loses $5 million and the one charging the low price makes $5 million. What is the Nash equilibrium for the non-repeated version of this game? Now suppose the game is infinitely repeated. If the interest rate is 10%, can you do better than you could in the non-repeated version of this game? If your answer is “yes”, provide the players’ strategies and any other conditions that must hold.
Consider an oligopolistic market with 5 identical firms that choose their profit-maximizing quantities simultaneously. Suppose each firm has constant marginal costs of $123 per unit and the market elasticity of demand is - 1.08. What is the change in the prevailing market price if one additional firm joins the market? Assume that the potential entrant is identical to the incumbent firms. O A. -7.71 O B. - 5.51 O C. -9.92 O D. - 6.89
Pictech Pricing High Low High 8, 8 4, 13 Flashfone Pricing Low 13, 4 7,7 For example, the lower-left cell shows that if Flashfone prices low and Pictech prices high, Flashfone will earn a profit of $13 million, and Pictech will earn a profit of $4 million. Assume this is a simultaneous game and that Flashfone and Pictech are both profit-maximizing firms. If Flashfone prices high, Pictech will make more profit if it chooses a v price, and if Flashfone prices low, Pictech will make more profit if it chooses price. price, and if Pictech prices low, Flashfone will make more profit if it chooses If Pictech prices high, Flashfone will make more profit if it chooses a price. a dominant strategy for both Flashfone and Pictech. Considering all of the information given, pricing low If the firms do not collude, what strategies will they end up choosing? O Flashfone will choose a high price, and Pictech will choose a low price. O Both Flashfone and Pictech will choose a high price. O Both…
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