True/False: Game theory is useful in explaining oligopoly markets because firms base their actions on how other firms act.. Group of answer choices True False
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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 do1. What do we mean by market power in economics? What are some ways firms can attain market power? How can we, as economists, know when a firm has "too much" market power? Give an example of a firm you think has a lot of market power.2. Chapter 3 is all about game theory. Imagine you are in charge of pricing at a firm that has 20% market share in an industry where the leading firm has 50% market share. Imagine that the leader increases prices on their products. How do you think you would react? Why?2
- 1. Consider the following game matrix. Player A Answer: Top Bottom Left a, b e, f Player B Right c, d g, h (a) If top and left are strictly dominant strategies, then what do we know the relationship of the parameters? (b) If (top, left) is a Nash equilibrium, then what do we know the relationship of the parameters? Answer: (c) If top and left are strictly dominant strategies, will (top, left) be a Nash equilibrium? Why? Answer: (d) If (top, left) is a Nash equilibrium, must the strategies be strictly dominant strategies? Why? Answer:Explain the nature of game theory. What current issue could this be applied to?Pay-offs (in terms of profit) for the two firms are give Firm2 startegies Firm1 Strategies C B W C [4, 4] [0, 5] [-1, 5] [5, 0] [2, 2] [-1, 1] W [5, -1] [1, -1] [0, 0] a)What is a dominant strategy for each player? b)What are the possible pure strategy Nash equilibrium/equilibria to the one-shot play of this game? c) Explain the likely out the game
- 1. The table below shows a prisoner's dilemma in normal form. Players 1 and 2 each choose between D and C. D C D 2,2 1,10 10, 1 5,5 Answer the following questions. Remember to explain your reasoning. (a) If the game is played only once, what is the equilibrium in dominant strategies? (b) If the game is played three times in a row, what action does each player choose in every round? Suppose that the game is repeated indefinitely. The players do not discount the future. How- ever, the game ends with probability p € (0, 1) after each round. Assume that each player uses the following grim-trigger strategy. Each player chooses C in the first round. Each player chooses C in the current round if both players chose C in every previous round. Each player chooses D in the current round if either player chose D in some previous round. (c) If p = 1, is it optimal for each player to use the grim-trigger strategy above given that the other player uses the grim-trigger strategy above? [Hint: compare…Q) Let x and y be real numbers and consider the game in Table 1. Using the concepts of dominance, best response and rationalizability, for which values of x and y is this game dominance solvable? Make sure to clearly explain the concepts used, and your reasoning. Hint: There are two possible cases which do not involve the same NE. i attached image. solve it early i upvote definetly1. Assume this game is played 2 times and there is no discounting. The whole payoff for two periods is the sum of payoffs of each period. Draw a tree of the game and solve it with subgame prefect Nash equilibrium. Explain clearly, handwritten is preferable.
- No written by hand solution15. Match the description provided in the bank of options with the appropriate concept in the second table. Bank of options Letter A Consumers agree X is prefered to Y when both have equal prices Consumer preferences are changed Consumers obtain more information about product characteristics Consumers are targeted with advertising Characteristic that is consumed as complementary to product itself One time cost to enter an industry changes when the market size increases A firm that is a leader obtains a higher profit in a dynamic game One time cost to enter an industry is treated as a parameter of model A firm that is a follower obtains a higher profit in a dynamic game Consumers do not agree X is prefered to Y when both have equal prices Industry with monopoly and perfect competition characteristics An empirical model used to estimate product differentiation В C E F G H I J K Concept Second mover advantage First mover advantage Vertical product differentiation Horizontal product…Subject: Manegerial economics & policy c) Which effect dominates, the price effect or the quality effect of a price change if demand isupward sloping? d) Why might demand be downward sloping in a market with imperfect information eventhough the market is otherwise perfectly competitive? e) Why are focal points important for noncooperative games?
