Two firms are considering going out of business and selling their assets. Each considers what happens if the other goes out of business, The payoff matrix below shows the net gain or loss to each firm. Firm A Staya in business Sells business Firm B Stays in business A gains $90 million A gains $70 million B gains $70 million B gains $40 million A gains $40 million A gains $10 million B gains $80 million B gains $30 million Sells business Refer to Table. The dominant strategy for firm B is to not stay in business and there is no dominant strategy for firm A causing a $40 million gain for firm A at the Nash equilibrium, for both firms is to stay in business causing a $70 milion gain for firm 8 at the Nash equilibrium for both firms is to not stay in business causing a $10 million gain for firm A at the Nash equilibrium. for firm A is to stay in business and there is no dominant strategty for firm B causing a $80 million gain for firm B.

Two firms are considering going out of business and selling their assets. Each considers what happens if the other goes out of business, The payoff matrix below shows the net gain or loss to each firm. Firm A Staya in business Sells business Firm B Stays in business A gains $90 million A gains $70 million B gains $70 million B gains $40 million A gains $40 million A gains $10 million B gains $80 million B gains $30 million Sells business Refer to Table. The dominant strategy for firm B is to not stay in business and there is no dominant strategy for firm A causing a $40 million gain for firm A at the Nash equilibrium, for both firms is to stay in business causing a $70 milion gain for firm 8 at the Nash equilibrium for both firms is to not stay in business causing a $10 million gain for firm A at the Nash equilibrium. for firm A is to stay in business and there is no dominant strategty for firm B causing a $80 million gain for firm B.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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