4. In an oligopoly, the ideal pricing strategy is for all firms to charge the high price. Due tothe structure of oligopoly markets, charging the low price is considered cheating, whenthere is more than one pricing-period expected, because competitors are likely to be shutout of the market in the short run. Assume that Dr. Fine and Dr. Feelgood are the onlytwo medical doctors offering immediate walk-in medical services in a small rural town.Therefore, they operate in a two-firm oligopoly. Each doctor can charge either a highprice or a low price for a standard medical visit. Figure 4 shows the possible profits forDr. Fine and Dr. Feelgood, based on each doctor's pricing strategy.Figure 4DrFieLowpriceHighpnceDr FeelgoodLow price$35 profit$35 profit$45 profit$0 profitHigh price$0 profit$45 profit$38 profit$38 profitI ##b. Using the information in Question 4 and Figure 4 above, complete the following table todepict the two-period pricing situation when Dr. Fine always plays "tit-for-tat" and Dr.Feelgood always plays "tit-for-tat.Enterresponsehere.EnterFeelgood responsehere.1FIRSTPeriodCharges(high or low)FineFIRSTPeriodPayoffsEnterresponsehere.Enterresponsehere.WESECONDPeriodCharges(high orlow)Enterresponsehere.Enterresponsehere.SECONDPeriodPayoffsEnterresponsehere.Enterresponsehere.TOTALPayoffsEnterresponsehere.Enterresponsehere.72°F Partly cloudy

Oligopoly is a kind of market structure in which the market does not have a large number of small…

Using the information in Question 4 and Figure 4 above, complete the following table to depict the two-period pricing situation when Dr. Fine always plays "tit-for-tat" and Dr. Feelgood always plays "tit-for-tat."

Using the information in Question 4 and Figure 4 above, complete the following table to depict the two-period pricing situation when Dr. Fine always plays "tit-for-tat" and Dr. Feelgood always plays "tit-for-tat."

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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