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- Does each individual in a prisoners dilemma benefit more from cooperation or from pursuing self-interest? Explain briefly.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.Discussion Question 13-11 Network effects give Internet firms a boost with respect to first mover advantages. This is because with network effects O whichever firm's network becomes the largest will become the most valuable to potential customers and will therefore attract even more users. O only firms with access to proprietary technology can form a network. O networks can be networked to create even more traffic and profits. O the first internet firm to establish a network has the most influence over any regulation. When network effects are at play, an increase in the number of people using a given product will shift the demand curve to Oright and make it more elastic. O the right and make it more inelastic. O left and make it more inelastic. O left and make it more elastic. NOV 12 tv NA 10
- . When Chinese automakers began exporting cars, rather thanfocusing on developed nations in the West, they shippedautos to emerging markets in countries such as Algeria, Russia,Chile, and South Africa. In these markets, even used vehiclesfrom multinational manufacturers are relatively scarce—andrelatively expensive. The Chinese automakers, who prioritizelow cost rather than design or even safety, applied a penetration-pricing strategy. A woman in Santiago, Chile, who boughta new Chery S21 explained, “The price factor is fairly decisive.I paid $5,500 new and full. Toyota with similar features costsaround $12,000.” Why do you think Chinese automakerschose that pricing strategy? Do you think it was successful?As Chinese regulators pressure these manufacturers to maketheir cars safer, do you think they will be able to keep theirprices low compared with those of the international automakers? Why or why not?26Table 18-14 Suppose that two oil companies-BP and Exxon-own adjacent natural gas fields. The profits that each firm earus depends on both the member of wells it drills and the number of wells drilled by the other firm. The table below lists each firm's individual profits: Exxon Drill one well Drill two wells BP Drill one well BP Drill two wells Exxon's profit $10 million BP's profit $10 million Exxon's profit $6 million BP's profit $12 million Exxon's profit $12 million BP's profit $6 million Exxon's profit $8 million. BP's profit $8 million Refer to Table 18-14. Does BP have a dominant strategy? If so, describe it. For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac) BIUS Paragraph Arial 5 田田田园 10pt 89. M XX, 833 >>() ⒸO HE [+ V A AV ✓ Z X T 94 ΩΘΙ *** 68.88Firms J and K produce compact-disc players and compete againstone another. Each firm can develop either an economy player (E)or a deluxe player (D). According to the best available marketresearch, the firms’ resulting profits are given by the accompanyingpayoff table.a. The firms make their decision independently, and each is seeking itsown maximum profit. Is it possible to make a confident predictionconcerning their actions and the outcome? Explain.Firm KE DE 30, 55 50, 60 Firm JD 40, 75 25, 50b. Suppose that firm J has a lead in development and so can move first.What action should J take, and what will be K’s response?c. What will be the outcome if firm K can move first?
- mether to produce a low output or a high output. nese output strategies with corresponding profits are depicted in the ayoff matrix to the right. Kuwait's profits are in red and Saudi Arabia's are in blue. Suppose the two countries form a cartel. What is the cooperative equilibrium? Kuwait O A. The cooperative equilibrium is for Saudi Arabia to produce a high output and Kuwait to produce a high output. Low Output High Output O B. A cooperative equilibrium does not exist for this game. $125 $75 Low Output O C. The cooperative equilibrium is for Saudi Arabia to produce a low output and Kuwait to produce a high output. $8 $13 Saudi Arabia O D. The cooperative equilibrium is for Saudi Arabia to produce a high output and Kuwait to produce a low output. $98 $70 E. The cooperative equilibrium is for Saudi Arabia to broduce a low output and Kuwait to produce a low output. High Output What is the Nash equilibrium for this game? O A. The Nash equilibrium is for Saudi Arabia to produce a high…Assume that the competition between Boeing and Airbus can be characterized by the following mnatrix Aórbus Produce Qut] Produce -15/ – 5 90/0 Boeing Quit 0/140 0/0 where the first number in each cell denotes the payoff that Boeing receives and the second nunber is the payoff that Airbus receives. Assume that Boeing has a first mover advantage. Then a subsidy of 10 provided to Airbus by the European government will change nothing will increase European welfare will negatively affect European welfare result in both firms leaving the market1. Suppose you are the economic adviser ofa company producing three brands of mobile pnones;Nokia 10, Samsung X and iPhone 7. Suppose further that, your company currently sells 120units of iPhone Z at e800 per unit, 150 units of Samsung X at e800 per unit and 200 units ofNokia 10 at e100 per unit, but in a bid to maximize profit, the company's managing directorproposes an increase in price of Samsung X from e800 to e1000 per unit for which quantitydemanded is anticipated to fall from 150 to 100 units; iPhone Z from e800 to e 1200 per unitfor which quantity demanded is anticipated to fall from 120 to 100 units; and Nokia 10 from100 to 200 per unit for which quantity demanded is expected to fall from 200 to 100 unitsUsing the mid-polint formula. compute the price elasticity of demand for each brand.From your answer in i, what is the type and economic interpretatiom of each brand'sii.value of elasticity.2. Briefly explain any three key features of a Perfect Competitive and a Monopolistic…
- There is much evidence that large firms with considerable market power (firms such asmonopolies) may not maximize profits but may pursue quite different objectives such asgrowth or sales revenue maximization. What are the arguments put forward to defendmonopoly? Name any 5 Generally, the aim of a business is to maximize profit. Which point should a firm operateat in order to achieve maximum profit? By making use of a graph indicate clearly the pointat which a firm makes maximum profit and a point where a firm increase their output inorder to enhance profit as well as well as the points where they should reduce theirproduction if they want to enhance profitNext Question Consider the network scheduling profit matrix Can the Pareto Critenon hep me networks sette on a single equibrum? Explain The Pareto Criterion Ne O A cannot help the networks sette on a singlo equibrum because the Wednesday Thursday networks cannot communicate OB. can help the networks settle on a single equibrum because the networks have dominant strateges Wednesday OC. cannot help the networks settie on a singie equilbnum because no Nash equilibria is better for both networks 40 Nebok 2 O D. can help the networks settle on a single equibrium because one Nash equilibrium has the highest joint payoffs O E. cannot help the networks settle on a single equilbrum because the networks must schedule simultaneously ThursdeyWould it be wise for a brick-and-mortar retailer thatwants to stop showrooming to use wireless-jammingtechnologies to prevent people from using smartphonesinside its stores? Why or why not?