Consider the payoff matrix below representing two firms engaged in Bertrand Competition. Firm A is player 1 and Firm B is player 2. High price Low price High price 10, 12 -1, 13 Low price 12, 2 0, 3 What is Firm A's dominant strategy? Question 14Answer a. High price b. Low price c. Firm A does not have a dominant strategy
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High |
Low price | |||
---|---|---|---|---|
High price | 10, 12 | -1, 13 | ||
Low price | 12, 2 | 0, 3 |
What is Firm A's dominant strategy?
Question 14Answer
High price
Low price
Firm A does not have a dominant strategy
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- The payoff matrix below is for two firms, A and B, deciding the quantity of their output levels. What is the dominant strategy of each firm? icrosc Firm B Strategy High output Low output High output 100, 80 0, 125 Firm A Low output 65, 0 40, 65 Both firms produce low levels of output. DO cGill Both firms produce high levels of output. Temp Firm A's dominant strategy is to produce low levels of output, but Firm B does not have a dominant strategy. Order Article O Firm B's dominant strategy is to produce low levels of output, but Firm A does not have a dominant strategy. Neither firm has a dominant strategy. oy 00 halysis2. An industry contains two firms that have identical cost functions C(q)=10+2q. The inverse demand function for the market is P=50-2Q where Q is the total industry output. Assuming the firms compete in quantities: Find the firms' best response functions. b. Solve for the Cournot Nash Equilibrium of the game. What is the total industry output in equilibrium? What is the equilibrium price? с. i. If both firms could collude, what would the industry output and price be? Suppose they decide that each firm produces half of the industry output found in part (i). Is this agreement self-enforcing? Explain. ii. a.◄ Search 12:47 PM Sun Nov 12 ← Note Nov 12, 2023 Uptown's price strategy The Nash equilibrium occurs when High Low LED RareAir's price strategy High $12 $15 The more favorable outcome would be for $12 Tt ✪ $6 B Low $6 D $8. $15 $8 S O both firms have an incentive to deviate from this strategy given the strategy of the competing firm. It is shown by the dominant strategy of cell A. 92% neither firm has an incentive to deviate from this strategy given the strategy of the competing firm. It is shown by the dominant strategy of cell D. O one firm consistently has an incentive to deviate from this strategy given the strategy of the competing firm. It is shown by the high-price strategy of cell B. O one firm consistently has an incentive to deviate from this strategy given the strategy of the competing firm. It is shown by the high-price strategy of cell C. O the firms to collude and use the high-price strategy but this strategy requires cooperation. O one firm to take the lead and let the…
- Give typing answer with explanation and conclusion Suppose two firms produce identical good. The inverse demand curve for the good is: P = 240-Q, where Q is the total quantity produced by the two firms. Each firm has a constant marginal cost 20 of producing the good and fixed cost = 100. Find the Cournot Nash equilibrium of this game. What quantity will each firm produce? what will be the market price? What would be the profits of each firm?Little Kona is a small coffee company that is considering entering a market dominated by Big Brew. Each company's profit depends on whether Little Kona enters and whether Big Brew sets a high price or a low price: True or False: Only Little Kona has a dominant strategy in this game. True or False Which of the following outcomes represent a Nash equilibrium in this case? Check all that apply. Big Brew maintains a high price and Little Kona enters. a.Big Brew maintains a low price and Little Kona enters. b.Big Brew maintains a high price and Little Kona does not enter. c.Big Brew maintains a low price and Little Kona does not enter. Big Brew threatens Little Kona by saying, “If you enter, we're going to set a low price, so you had better stay out.” True or False: Little Kona should not believe the threat. True or False If the two firms could collude and agree on how to split the total profits, what outcome would they…Duopoly: 1. Consider a duopoly game with 2 firms. The market inverse demand curve is given by P(Q) = 120-Q, where Q = 9₁ +9₂ and q; is the quantity produced by firm i. The firm's long run total costs are given by C₁(9₁)=2q₁ and C₂(92)=92, respectively. a. Determine the Nash Equilibrium for Cournot competition, in which firms compete based on quantity. What is each firm's best response as a function of the other firm's output? Graph these best response functions in on the same graph. Compute the associated payoffs for each firm. b. Determine the Nash Equilibrium for Bertrand competition, in which firms compete based on price and stand ready to meet market demand at that price. What is each firm's best response as a function of the other firm's price? Graph these best response functions in on the same graph. Compute the associated payoffs for each firm. Game Th
- Synergy and Dynaco are the only two firms in a specific high-tech industry. They facethe following payoff matrix as they decide upon the size of their research budget:a. Does Synergy have a dominant strategy? Explain.b. Does Dynaco have a dominant strategy? Explain.c. Is there a Nash equilibrium for this scenario? Explain. (Hint: Look closely at thedefinition of Nash equilibrium.)Question 14 Simultaneous vs. Sequential Game Levi Strauss White Black Violet 20 60 80 White 20 40 60 Wrangler 40 70 Black 60 30 30 40 Violet 80 70 1. Given that the two firms decide on strategies simultaneously find any dominant strategies.2. Provide the normal-form expression to the extensive-form game below, and find all pure-strategy Nash equilibria there. Find the subgame-perfect Nash equilibrium then. A B X E Y B A B F t G F G BF B D A 0 3. Find the subgame perfect Nash equilibria (may or may not be unique) in the game below. A B 100 30 F 60 9 5 B 3 5 12 10 60 10 80 10 180 60 200 40
- 12. An important characteristic of a dominant strategy is that: Select one: a. it is the best strategy to dominate your opponents b. it always leads to a Nash equilibrium where all players equally well off c. it can prevent the game reaching a Nash equilibrium d. it is the best strategy for a player, regardless of whatever strategy the opponent choosesQUESTION 14 Note: No referencing is required for short answer questions. The following market is a duopoly populated only by the companies Alphe and Beta. The pay-off matric immediately below shows the combinations of pricing strategies available Assuming Beta has a first mover advantage in a one-shot game, what is lieky to be the Nash equilibrium? Explain your answer Alpha High price Low price High price 250, 200 Beta 200, 100 Low price 50, 150 100, 250 The numbers represent millions of c in profe (The rRefer 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 PM