2. Using a payoff matrix to determine the equilibrium outcome Suppose that Flashfry and Warmbreeze are the only two firms in a hypothetical market that produce and sell air fryers. The following payoff matrix gives profit scenarios for each company (in millions of dollars), depending on whether it chooses to set a high or low price for fryers. Flashfry Pricing High Low Warmbreeze Pricing High Low 11, 11 3,15 15,3 9.9 For example, the lower-left cell shows that if Flashfry prices low and Warmbreeze prices high, Flashfry will earn a profit of $15 million, and Warmbreeze will earn a profit of $3 million. Assume this is a simultaneous game and that Flashfry and Warmbreeze are both profit-maximizing firms If Flashfry prices high, Warmbreeze will make more profit if it chooses a chooses a price. If Warmbreeze prices high, Flashfry will make more profit if it chooses a chooses a price. Considering all of the information given, pricing high If the firms do not collude, what strategies will they end up choosing? price, and if Flashfry prices low, Warmbreeze will make more profit if a dominant strategy for both Flashfry and Warmbreeze. price, and if Warmbreeze prices low, Flashfry will make more profit if O Both Flashfry and Warmbreeze will choose a high price. Both Flashfry and Warmbreeze will choose a low price. Flashfry will choose a low price, and Warmbreeze will choose a high price. Flashfry will choose a high price, and Warmbreeze will choose a low price. True or False: The game between Flashfry and Warmbreeze is an example of the prisoners' dilemma.

First 4 blanks: high/low Last blank: is not/is

The payoff matrix in the figure to the right shows the payoffs for a pricing game. If you were firm A, which strategy would you choose? Firm A should A. price high because this is their maximin strategy. B. price low because this is their tit-for-tat strategy. C. price high because this is their dominant strategy. D. price low because this is their dominant strategy. E. price low because this maximizes profits of both firms. Firm B's dominant strategy is to price If this game were repeated a large number of times and you were firm A and you could change your strategy, what might you do? Firm A should O A. use a tit-for-tat strategy by responding in kind to firm B's play. B. use a maximin strategy by maximizing the minimum gain that can be earned. C. use a tit-for-tat strategy by selecting a price that minimizes firm B's profits. D. use a maximin strategy by by responding in kind to firm B's play. E. use a tit-for-tat strategy by maximizing the minimum gain that can be earned. C Price…

◄ 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…

QUESTION 13 Consider a market where two firms (1 and 2) produce differentiated goods and compete in prices. The demand for firm 1 is given by D₁(P₁, P2) = 140 - 2p1 + P2 and demand for firm 2's product is D2 (P1, P2) 140 - 2p2 + P1 Both firms have a constant marginal cost of 20. What is the Nash equilibrium price of firm 1? (Only give a full number; if necessary, round to the lower integer; no dollar sign.)

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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6. Using a payoff matrix to determine the equilibrium outcome Suppose that Zipride and Citron are the only two firms in a hypothetical market that produce and sell electric scooters. The following payoff matrix gives profit scenarios for each company (in millions of dollars), depending on whether it chooses to set a high or low price for scooters. Zipride Pricing price. High Low For example, the lower-left cell shows that if Zipride prices low and Citron prices high, Zipride will earn a profit of $13 million, and Citron will earn a profit of $3 million. Assume this is a simultaneous game and that Zipride and Citron are both profit-maximizing firms. Citron Pricing High 9,9 13, 3 If Zipride prices high, Citron will make more profit if it chooses a Low If the firms do not lude, 3, 13 6, 6 If Citron prices high, Zipride will make more profit if it chooses a price. Considering all of the information given, pricing low True False Both Zipride and Citron will choose a low price. strategies…

2. Consider the following game. Assume that this game is played simultaneously and without collusion.  The two companies are choosing between two strategies: go international or stay national. The outcomes of each strategy for each company are given the following payoff matrix:   a) Find Nash equilibrium in this game. Interpret the equilibrium you found.  b) What is the Chipco's dominant strategy, if it has one? How shall Chipco's payoffs change for it to not have a dominant strategy anymore?

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