6. Using a payoff matrix to determine the equilibrium outcomeSuppose there are only two firms that sell tablets: Padmania and Capturesque. 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 tablets.Capturesque PricingHighLowHigh11, 112, 18Padmania PricingLow18, 210, 10For example, the lower-left cell shows that if Padmania prices low and Capturesque prices high, Padmania will earn a profit of $18 million, andCapturesque will earn a profit of $2 million. Assume this is a simultaneous game and that Padmania and Capturesque are both profit-maximizingfirms.If Padmania prices high, Capturesque will make more profit if it chooses a▼ price, and if Padmania prices low, Capturesque will make more profit ifit chooses aprice.If Capturesque prices high, Padmania will make more profit if it chooses aprice, and if Capturesque prices low, Padmania will make more profit ifit chooses aprice.Considering all of the information given, pricing higha dominant strategy for both Padmania and Capturesque.If the firms do not collude, what strategies will they end up choosing?O Padmania will choose a low price, and Capturesque will choose a high price.O Both Padmania and Capturesque will choose a high price.O Padmania will choose a high price, and Capturesque will choose a low price. For example, the lower-left cell shows that if Padmania prices low and Capturesque prices high, Padmania will earn a profit of $18 million, andCapturesque will earn a profit of $2 million. Assume this is a simultaneous game and that Padmania and Capturesque are both profit-maximizingfirms.If Padmania prices high, Capturesque will make more profit if it chooses aprice, and if Padmania prices low, Capturesque will make more profit ifit chooses a ▼ price.If Capturesque prices high, Padmania will make more profit if it chooses aprice, and if Capturesque prices low, Padmania will make more profit ifit chooses av price.Considering all of the information given, pricing highv a dominant strategy for both Padmania and Capturesque.If the firms do not collude, what strategies will they end up choosing?O Padmania will choose a low price, and Capturesque will choose a high price.O Both Padmania and Capturesque will choose a high price.O Padmania will choose a high price, and Capturesque will choose a low price.Both Padmania and Capturesque will choose a low price.True or False: The game between Padmania and Capturesque is not an example of the prisoners' dilemma.TrueO False

The supply function shows arranged reactions to contrasting level of cost. Assuming either the…

Capturesque Pricing High Low High 11, 11 2, 18 eing Low 18, 2 10, 10 ower-left cell shows that if Padmania prices low and Capturesque prices high, Padmania will earn a profit of $18 million, and earn a profit of $2 million. Assume this is a simultaneous game and that Padmania and Capturesque are both profit-maximizing s high, Capturesque will make more profit if it chooses a price, and if Padmania prices low, Capturesque will make more profit if price. ces high, Padmania will make more profit if it chooses a price, and if Capturesque prices low, Padmania will make more profit if price. the information given, pricing high a dominant strategy for both Padmania and Capturesque. : collude, what strategies will they end up choosing?

Capturesque Pricing High Low High 11, 11 2, 18 eing Low 18, 2 10, 10 ower-left cell shows that if Padmania prices low and Capturesque prices high, Padmania will earn a profit of $18 million, and earn a profit of $2 million. Assume this is a simultaneous game and that Padmania and Capturesque are both profit-maximizing s high, Capturesque will make more profit if it chooses a price, and if Padmania prices low, Capturesque will make more profit if price. ces high, Padmania will make more profit if it chooses a price, and if Capturesque prices low, Padmania will make more profit if price. the information given, pricing high a dominant strategy for both Padmania and Capturesque. : collude, what strategies will they end up choosing?

Principles of Microeconomics (MindTap Course List)

8th Edition

ISBN:9781305971493

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter17: Oligopoly

Section: Chapter Questions

Problem 9PA

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