Econ Micro (book Only)
6th Edition
ISBN: 9781337408066
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 10, Problem 9P
To determine
The dominant strategy for the firms in the duopoly market and establishing the equilibrium strategy combination and the Nash equilibrium for the market.
Concept Introduction:
Dominant Strategy- The strategy for a player for which he does better in terms of payoffs/profits irrespective of the strategy of the rival, is said to be his dominating strategy.
Nash Equilibrium- The strategy combination for the two players which is mutually agreed upon for higher returns such that no one player has an incentive to deviate from it unilaterally, is said to be a Nash Equilibrium.
| FORD SELLING PRICE → | $4,000 | $8,000 | $12,000 |
|---|---|---|---|
| CHEVROLET SELLING PRICE↓ | |||
| $4,000 | 8,8 | 12,6 | 14,2 |
| $8,000 | 6,12 | 10,10 | 12,6 |
| $12,000 | 2,14 | 6,12 | 7,7 |
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Round Tree Manor is a hotel that provides two types of rooms with three rental classes: Super Saver, Deluxe, and Business. The profit per night for each type of room and rental class is as follows.
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Round Tree's management makes a forecast of the demand by rental class for each night in the future. A linear programming model developed to maximize profit is used to determine how many reservations to accept for each rental class. The demand forecast for a
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