Suppose that BYOB charges $2.50 per can. Your friend Larry says that since BYOB is a monopoly with market power, it should charge a higher price of $3.00 per can because this will increase BYOB's profit. Complete the following table to determine whether Larry is correct. Price Quantity Demanded Total Revenue Total Cost Profit (Dollars per can) (Cans) (Dollars) (Dollars) (Dollars) 2.50 3.00 Given the earlier information, Larry correct in his assertion that BYOB should charge $3.00 per can.
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- AP CollegeBoard Test Booklet Unit 4 Problem Set Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagram must have all axes and curves clearly labeled and must show directional changes. If the question prompts you to “Calculate," you must show how you arrived at your final answer. Use the graph provided below to answer parts (a)-(e). Marginal Cost Average Total Cost Average Variable Cost 108 100 55 Demand 0 10 21 31 44 57 77 Quantity Marginal Revenue BigMed, a profit-maximizing firm, has a patent on a medical device, making it the only producer of that device. The graph above shows BigMed's demand, marginal revenue, average total cost, average variable cost, and marginal cost curves. (a) Calculate BigMed's total revenue if the firm produces the allocatively efficient quantity. Show your work. (b) Starting at a price of $100, if BigMed were to increase the price by 2%, will the quantity demanded decrease by more than 2%, by less…The Tampa Tribune and the St. Petersburg Times compete for readers in the Tampa Bay market for newspapers. Recently, both newspapers considered changing the prices they charge for their Sunday editions. Suppose they considered the following payoff table for making a simultaneous decision to charge either a low price of $0.50 or a high price of $1.00. Tampa’s profits are shown in regular type. St. Petersburg’s profits are shown in bold. 7. Which cell(s) is/are strategically stable?The Tampa Tribune and the St. Petersburg Times compete for readers in the Tampa Bay market for newspapers. Recently, both newspapers considered changing the prices they charge for their Sunday editions. Suppose they considered the following payoff table for making a simultaneous decision to charge either a low price of $0.50 or a high price of $1.00. Tampa’s profits are shown in regular type. St. Petersburg’s profits are shown in bold. 5. This newspaper pricing decision ________ (is, is not) a Prisoners' Dilemma.
- Exercise 6.7. Suppose two identical companies produce wood stoves and they are the only ones on the market. Its costs are given by: C1 (q1 )=200q1 and C2 (q2) = 200q2. And the inverse market demand curve is: P=2000-2Q, where Q =q1 + q2 Get the Cournot-Nash equilibrium. Calculate the profits of each company. Show graphically. Suppose that the two companies form a cartel to maximize joint profits. How many stoves will you produce? Calculate the profits of each company. Represent graphically. Managers now note that explicit agreements to collude are illegal. Each company must decide on its own whether to produce the amount of Cournot or that of the cartel.Consider two restaurants located next door to each other: Quick Burger and The Sunshine Café. If Quick Burger opens a drive-through window, the increased traffic and noise will bother customers seated outside at The Sunshine Café. The accompanying table shows the monthly payoffs to Quick Burger and The Sunshine Café when Quick Burger does and does not operate a drive-through window. Quick Burger Operates aDrive-Through Window Quick Burger Does NotOperate Drive-Through Window Quick Burger $ 24,000 $ 12,000 The Sunshine Café $ 15,000 $ 23,000 Suppose Quick Burger has the legal right to operate a drive-through window, and Quick Burger and the Sunshine Café can negotiate with each other at no cost. Which of the following arrangements would lead to the socially optimal outcome? Multiple Choice Quick Burger pays The Sunshine Cafe $10,000 to operate the drive-through window. Quick Burger pays The Sunshine Cafe $12,750 to operate the drive-through window.…The payoff matrix below shows the possible actions and payoffs of Walmart and Target with respect to a particular product. The non-cooperative solution occurs when: Target Price High Price Low $40 Price High $40 Price Low $50 $15 $50 $15 $30 $30 [15.4.1 Decisions, Decisions-What Price to Charge?] A Walmart prices low and Target prices high. B Walmart and Target both price high. Walmart prices high and Target prices low.. Walmart and Target both price low. Last saved 8:33:38 PM Submit
- 10:04 PM cb = Chegg Economics Vo LTE expert.chegg.com/expertqna Time remaining: 00:09:49 Consider the following payoff matrix for two oligopolists that are deciding what quantity to produce: Firm 2 High Quantity Low Quantity $70k; $70k $130k; $20k High Quantity Firm 1 $20k; $130k $100k; $100k Low Quantity In the Nash equilibrium of this game, what are the payoffs to each firm? O a. Firm 1 receives $130k and Firm 2 receives $20k. O b. Firm 1 receives $20k and Firm 2 receives $130k. O c. Firm 1 receives $100k and Firm 2 receives $100k. O d. Firm 1 receives $70k and Firm 2 receives $70k. Answer Skip 4G Exit 2 ¹20%Using a payoff matrix to determine the equilibrium outcome Suppose there are only two firms that sell smart phones, Flashfone and Pictech. 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 phones. Pictech Pricing High Low Flashfone Pricing High 11, 11 2, 18 Low 18, 2 10, 10 For example, the lower, left cell shows that if Flashfone prices low and Pictech prices high, Flashfone will earn a profit of $18 million and Pictech will earn a profit of $2 million. Assume this is a simultaneous game and that Flashfone and Pictech are both profit-maximizing firms. If Flashfone prices high, Pictech will make more profit if it chooses a ______ price, and if Flashfone prices low, Pictech will make more profit if it chooses a _____ price. If Pictech prices high, Flashfone will make more profit if it chooses a _____ price, and if Pictech prices low, Flashfone will make more…Using a payoff matrix/table to determine the equilibrium outcome Suppose there are only two firms that sell smartphones, Flashfone and Pictech. The following payoff matrix/table shows the profit (in millions of dollars) each company will earn, depending on whether it sets a high or low price for its phones. Pictech Pricing High Low Flashfone Pricing High 10, 10 4, 12 Low 12, 4 9, 9 For example, the lower left cell shows that if Flashfone prices low and Pictech prices high, Flashfone will earn a profit of $12 million and Pictech will earn a profit of $4 million. Assume this is a simultaneous game and that Flashfone and Pictech are both profit-maximizing firms. If Flashfone prices high, Pictech will make more profit if it chooses a price, and if Flashfone prices low, Pictech will make more profit if it chooses a price. If Pictech prices high, Flashfone will make more profit if it chooses a price, and if Pictech prices low, Flashfone will make…
- Jagtar and Ravi both grow mangoes, which they sell in the same local market. They are deciding whether to pick 5 baskets worth of mangoes or 10 baskets, and have the following profit matrix: Jagtar 5 1 17 5 1 22 16 14 Ravi 1 24 14 a. What is the Nash equilibrium if both individuals make their decisions simultaneously? b. Does your analysis change if the local market charges a lump-sum fee of 12 to set up a stall and sell the mangoes in the space it provides? c. What would happen if the local market were instead to charge a lump-sum fee of 18?The bimatrix represents a simultaneous move game between Rowena and Colin. Rowena's payoff is the left number in each cell. ROWENA Up Down 0.25Left +0.75Right 0.65Left +0.35Right Find Colin's mixed strategy that makes Rowena indifferent between a pure strategy of playing Up and a pure strategy of playing Down. 0.5Left +0.5Right Left 1,16 2,20 0.45Left +0.55Right COLIN Right 4,6 3,40Nike and Adidas face the following coordination problem in trying to decide whether to conduct heavy or light combative advertising against the other firm. Adidas Light Ads Heavy Ads Nike Light Ads $20 M, $24 M $10 M, $8 M Heavy Ads $8 M, $12 M $16 M, $18 M Assuming that both companies announce their strategies simultaneously, which of the following set of strategies are Nash equilibrium? Check all that apply. ○ {Light Ads with Probability = 0.5909, Light Ads with Probability = 0.6222} O {Light Ads A, Heavy Ads N} O {Light Ads with Probability = 0.4545, Light Ads with Probability = 0.4444} O {Heavy Ads A, Light AdsN} O {Light Ads, Light Adsµ} ○ {Heavy Adsµ, Heavy Adsµ}