Hotel Price Fixing? Waikiki Beach has two hotels, one run by Juan and a second run by Tulah. The average cost of providing rooms is constant at $30 per day. Assume low-price guarantees are illegal. Here are the possible outcomes: (Enter your responses as integers.) Price-fixing (cartel). Each firm has 30 customers per day at a price of $42. Corresponding profit for each firm will be $360 Duopoly (no price-fixing). Each firm has 38 customers per day at a price of $37. Corresponding profit for each firm will be $266. Underpricing (one firm charges $42 and the other charges $37). The low-price firm has 70 customers and the high-price firm has 10 customers. Corresponding profit for the low-price firm will be $ and profit for the high-price firm will be $. Juan chooses a price first, followed by Tulah. A game tree for the price-fixing game with corresponding profits is depicted to the right. Predict the outcome. O A. Juan and Tulah will both choose a price of $37. B. Juan will choose a price of $42 and Tulah will choose a price of $37. O C. Juan will choose a price of $37 and Tulah will choose a price of $42. O D. Juan and Tulah will both choose a price of $42.

Hotel Price Fixing? Waikiki Beach has two hotels, one run by Juan and a second run by Tulah. The average cost of providing rooms is constant at $30 per day. Assume low-price guarantees are illegal. Here are the possible outcomes: (Enter your responses as integers.) Price-fixing (cartel). Each firm has 30 customers per day at a price of $42. Corresponding profit for each firm will be $360 Duopoly (no price-fixing). Each firm has 38 customers per day at a price of $37. Corresponding profit for each firm will be $266. Underpricing (one firm charges $42 and the other charges $37). The low-price firm has 70 customers and the high-price firm has 10 customers. Corresponding profit for the low-price firm will be $ and profit for the high-price firm will be $. Juan chooses a price first, followed by Tulah. A game tree for the price-fixing game with corresponding profits is depicted to the right. Predict the outcome. O A. Juan and Tulah will both choose a price of $37. B. Juan will choose a price of $42 and Tulah will choose a price of $37. O C. Juan will choose a price of $37 and Tulah will choose a price of $42. O D. Juan and Tulah will both choose a price of $42.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.2P

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