Smalltown has 140 residents and two mobile phone providers: Verizon and AT&T Each firm's costs: FC=$0, MC $10. Assume the two firms collude and share the profits equally. Is there a Nash Equibrium? P QTR 45 50 40 60 35 70 30 80 25 90 20 100 15 110 10 120 5 130 0 140 TC Profit O Yes, each firm produces 40 goods and charges $30 O No, each firm will continue to cheat until they each make $0 profits O Yes, because Verizon has a dominant strategy O Yes, each firm produces 45 goods and chargers $25
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- When OPEC raised the price of oil dramatically in the mid-1970s, experts said it was unlikely that the cartel could stay together over the long term-that the incentives for individual members. to cheat would become too strong. More than fort),r years later, OPEC still exists. Why do you think OPEC has been able to beat the odds and continue to collude? Hint: You may wish to consider non-economic reasons.Refer to the table below to answer the following questions. Table 14.2.10 Fim A Comply A: Sim Cheat A $1 Sm Comply B Sim B-S05m Firm B A:-50.5m A0 Cheat B $15m B:0 Refer to Table 14.2.10. Firm A and Firm B are the only producers of soap powder. They collude and agree to share the market equally. The equilibrium a dominant strategy equilibrium because the strategy in this game is for a firm Select one O A is to comply regardless of the other firm's choice O B.is to comply when the other firm cheats and to cheat when the other firm complies O Cis not to comply when the other firm complies and to cheat when the other firm cheats OD. is to cheat regardless of the other firm's choice OEis not to comply when the other firm cheats and to cheat when the other firm complies 219 PM4:21 lLTE Work 13. In the Nash equilibrium of a prisoner's dilemma: 14. Suppose Acme and Mega produce and sell identical products and face zero marginal and average cost. Below is the market demand curve for their product 4 3 2 D 0 0 50 200 100 150 Quantity Suppose Acme and Mega decide to collude and work together as a monopolist with each firm producing half the quantity demanded by the market at the monopoly price. If Mega cheats on the agreement by red ucing its price to $1 and Acme matches the price cut, then if consumers are evenly split between the two firms, Acme's economic profit will be Price ($/unit)
- QUESTION 3 Smalltown has 140 residents and two mobile phone providers: Verizon and AT&T Each firm's costs: FC = $0, MC = $10. Assume the two firms collude, how much profit does each make if they share it equally? P Q TR TC Profit 45 50 40 60 35 70 30 80 25 90 20 100 15 110 10 120 5 130 0 140 O Q = 30, P = $40, profits = $900 Q = 40, P = $30, profits = $800 Q = 60, P = $10, profits = $0 Q =25, P = $45, profits = $875Let's assume that the biggest two firms in the video game sector merged and that the market share of the new firm representing the two merged firms is equal to 39% of the market. Let's assume that after merger HHI of the video game industry is 2071. Based on the Federal Trade Commission's historical standards for mergers, would the Federal Trade Commission certify this merger? No, the FTC would probably challenge the merger. No answer text provided. Maybe. The FTC would scrutinize the merger and make a case-by-case decision. Yes, the FTC would ignore the merger and allow it to go through.This exercise related to a game theory P 14 13 12 11 10 9 8 7 6 5 QD 50 100 150 200 250 300 350 400 450 500 Consider a market with the above demand and two firms. Both firms have a constant marginal cost of 7. 1. What price should these firms charge to maximize total industry profit? (Note: the marginal condition we learned will work here but you need to be careful because the changes in quantity on the schedule are not 1. Because of this, you might want to use a brute force approach here. It's worth thinking about how you would reconcile it with the marginal condition though. Also, the marginal condition doesn't match exactly so take the best number from the schedule.)......... 2. Assuming that if they set the same price, they split the market evenly, what will the profit of each firm be if they both set the above…
- fnan421 - Word Teri Gozden Geçir Görünum Yardım Ne yapmak istediğinizi soyleyin 2) Two firms, X and Y, are planning to market their new products. Each firm can develop TV, Laptop. Market research indicates that the resulting profits to each firm for the alternative strategies are given by the following payoff matrixi FIRM Y TV LAPTOP PHONE FIRM X TV 30, 30 50, 35 20, 50 LAPTOP 40,70 20, 20 50,80 PHONE 50,20 80,50 10,10 A) What will be the equilibrium if Firm X makes its selection first? If Firm Y goes first? ; (Ctrl) -Rainbow Wer-Odeon Bargaining Game Rainbow Reeder Rep S O St O O PH M Rainbow Writer (RW) is a small online company selling a highly rated software package for printing color labels directly onto CDs. The firm currently earns a profit of $2 million per year selling its package exclusively on its Web site. Odeon, the producer of the most popular software package for editing and burning CDs and DVDs has expressed interest in bundling Rainbow Writer's product into its own package. Odeon expects that bundling would further boost its sales and allow it to sell the new bundled product at a higher price, thus raising its profits beyond its current profit of $12 million. Figure 5 shows the decision tree for the Rainbow Writer-Odeon bargaining game. Refer to Figure 5. How will Rainbow Writer respond to Odeon's two possible offers? O Rainbow Writer will only accept an offer of $40 per copy of the software package. O Rainbow Writer will only accept an offer of $30 per copy of the software package.…In the mobile phone market, Samsung and Apple constitute a duopoly in the production of devices.The American firm has the following demand q_a = 10 - p_a + 0.25p_s, and the Korean firm, q_s = 20 -p_s+ 0.5p_a. Because both firms assembly their devices in China, their cost structure is the same andequal to ?(q) = 10q, answer the following questions.a) What would be the equilibrium (quantity, price, and profit) in this market, and interpret youranswer.b) If they decide to form a cartel, what are the new quantities, prices, and profits?
- Isolated Island has three natural gas wells. Three firms each own one. The table gives the demand schedule for gas on this island. The marginal cost of producing gas is $6 a unit. The table gives the demand schedule for gas on this island. Price (dollars per unit) Quantity demanded (units per day) 36 0 33 3 30 6 27 9 24 12 21 15 18 18 15 21 12 24 9 27 6 30 3 33 0 36 3 tries left If the three firms form a cartel and maximize their joint profit, what will be the price of gas, and what quantity will they produce? The price of gas will be $ Type a unit, and the quantity produced will be Type units a day.1. Assume the market demand for carbonated water be given by QD = 200 − 5P. Assuming there are two firms (A and B) producing carbonated water, each with a constant marginal cost of $ 2. a. What is the market equilibrium price and quantity when each firm behaves as a Cournot duopolist choosing quantities? What profit does each firm earn? b. What is the market equilibrium price and quantity when each firm behaves as a Bertrand duopolist choosing price? What firm profit does each firm earn now?high low high 11, 11 2,18 low 18, 2 10,10 Suppose there are only two firms that sell tablets: Padmania and Capturesque. The following payoff matrix shows the profit (in millions of dollars) each company will earn, depending on whether it sets a high or low price for its tablets. For example, the lower-left cell shows that if Padmania prices low and Capturesque prices high, Padmania will earn a profit of $18 million, and Capturesque will earn a profit of $2 million. Assume this is a simultaneous game and that Padmania and Capturesque are both profit-maximizing firms. If the firms do not collude, what strategies will they end up choosing? 1. Padmania will choose a low price, and Capturesque will choose a high price. 2. Both Padmania and Capturesque will choose a high price. 3. Padmania will choose a high price, and Capturesque will choose a low price. 4. Both Padmania and Capturesque will choose a low price. True or False: The…