ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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QUESTION 21
(Table: GoGo Gas and Fanny's Fantastic Fuel) Use Table: GoGo Gas and Fanny's Fantastic Fuel. The table shows a payoff matrix for GoGo Gas and Fanny's Fantastic
Fuel in a small town. Each firm can set either a high price or a low price, and customers view both gas stations as nearly perfect substitutes. Profits in each cell of the
payoff matrix are given as (GoGo's profit, Fanny's profit). If each firm sets the price independently, the Nash equilibrium outcome will be:
Table: GoGo Gas and Fanny's Fantastic Fuel
Fanny's Fantastic Fuel
High Price
S100, S100 $25, $150
$150, $25
Low Price
High Price
Low Price
GoGo Gas
$50, $50
O a $100, $100.
b. $150, $25.
c. $25, $150.
d. S50, $50
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Transcribed Image Text:QUESTION 21 (Table: GoGo Gas and Fanny's Fantastic Fuel) Use Table: GoGo Gas and Fanny's Fantastic Fuel. The table shows a payoff matrix for GoGo Gas and Fanny's Fantastic Fuel in a small town. Each firm can set either a high price or a low price, and customers view both gas stations as nearly perfect substitutes. Profits in each cell of the payoff matrix are given as (GoGo's profit, Fanny's profit). If each firm sets the price independently, the Nash equilibrium outcome will be: Table: GoGo Gas and Fanny's Fantastic Fuel Fanny's Fantastic Fuel High Price S100, S100 $25, $150 $150, $25 Low Price High Price Low Price GoGo Gas $50, $50 O a $100, $100. b. $150, $25. c. $25, $150. d. S50, $50
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