Refer to the accompanying normal-form game of advertising depicted here. Firm B Do Not Advertise Advertise Firm A Advertise $0, $0 $175, -$100 Do Not -$100, $175 $125, $125 Advertise Suppose there is a 50 percent chance that the advertising game depicted shown above will end in the next period. The collusive agreement is

Consider a game where a potential market Entrant is trying to decide whether or not to enter the market. An Incumbent monopolist is established and can choose to cut the price, maintain the price, or raise the price in hopes of deterring the Entrant from entering. Incumbent Entrant Enter Stay Out Cut Price -4,4 0,9 Maintain Price 4,6 0,12 Raise Price 5,5 0, 13 a) Suppose the Entrant and the Incumbent make their decisions simultaneously. Is there a pure strategy Nash equilibrium? If so, what is it? b) Suppose the players move sequentially, and that the Entrant moves first. Set up the game tree and solve for the equilibrium path. Can the Incumbent deter entry? Explain. c) Now suppose that the Incumbent moves first. Again, set up the game tree. What is the subgame perfect Nash equilibrium outcome now? Can the Incumbent deter entry now?

All question are with regards to the following set up. There are two firms A and B. Firms compete in a Cournot Duopoly in Karhide. They set quantities qa and qB. Inverse demand is P(qA + qB) = 18 – qA – qB and costs are C(q) (in Karhide,) and firm A is a foreign firm (from Orgoreyn.) The government of Karhide engages in a strategic trade intervention by giving firm B a per unit subsidy of s. (That is, when firm B produces and sells qB units, firm B receives a payment of s * qB from the government.) You must show your work at each step, unless the questions is followed by "No work required." 3 * q for both firms. Firm B is a domestic firm   (4) We now consider the government’s choice of s≥0. We can see from above thatprofits and outputs depend upon s. With that in mind, let πB(s) and qB(s) denote firm B’s profit and output as a function of the subsidy s. Let qA(s) denote firm A’s equilibrium output as a function of s. Let G(s) = πB(s) − s*qB(s) denote the government’s objective…

Two rival companies competing in the same market need to decide their plans for future expansion of their stores. The Table below shows the possible outcomes of their mutually interdependent actions (payoffs are profits in £m)     Giga Company Titanic Conglomerate   No Change Refurbishment of existing stores Large Expansion No Change     30, 40      25, 35    15, 24 Refurbishment of existing stores     35, 30      28, 32    18, 33 Large Expansion     12, 22     18, 20    20, 25   The Nash equilibrium:            (A)       does not exist. (B)       occurs when both firms choose Refurbishment of existing stores.              (C)       occurs when both firms choose Large Expansion. (D)       occurs when both firms choose No Change.

The interdependence observed among oligopolistic firms is often studied using the tools of game theory.

Synergy and Dynaco are the only two firms in a specific high-tech industry. They face the following payoff matrix as they decide upon the size of their research budget: Dynaco's Decision Synergy's Decision Large Budget Large Budget $30 million, $20 million Small Budget $0, $30 million If Synergy believes Dynaco will go with a large budget, it will choose a budget. If Synergy believes Dynaco will go with a small budget, it will choose a budget. Therefore, Synergy a dominant strategy. O True Small Budget $70 million, $0 $50 million, $40 million If Dynaco believes Synergy will go with a large budget, it will choose a budget. If Dynaco believes Synergy will go with a small budget, it will choose a budget. Therefore, Dynaco a dominant strategy. O False True or False: There is a Nash equilibrium for this scenario. (Hint: Look closely at the definition of Nash equilibrium.)

MCQ 27 Consider the following game in which two firms (OLD and NEW) are considering whether or not to advertise to increase sales. Each firm knows that the impact on profits depends on what the other firm chooses to do. The possible profit outcomes of the game are shown below, with OLD's profits shown as the first number in each pair and NEW's profits shown as the second number: NEW Advertise Not Advertise Advertise 10, 5 15, 1 OLD Not Advertise 5, 8 20, 3 Assuming the firms aim to earn as much profit as possible, which of the following is TRUE for the game? A I do not want to answer this question. OLD's dominant strategy is to advertise C OLD's dominant strategy is not to advertise NEW's dominant strategy is not to advertise E NEW's dominant strategy is to advertise F the dominant strategy for both OLD and NEW is to advertise

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…

Problem # 4 Idea Inc. is a small publishing company operating in the college and textbook market, which is one of the most profitable segments for book publishers. Idea Inc. has a cost of producing, handling, and shipping of about $30 for each additional book. The publisher’s overall marketing and promotion spending (set annually) accounts for an average cost of about $10 per book. Idea Inc.’s best-selling game theory text has a demand curve: P = 200 - Q, where Q denotes yearly sales (in thousands) of books. For this text Idea Inc. pays a $10 per book royalty to the author. a) Determine the profit-maximizing output and price for the game theory text. b) A rival publisher has raised the price of its best-selling game theory text by $20. One option is to exactly match this price hike and so exactly preserve your level of sales. Do you endorse this price increase? (Explain briefly why or why not.) c) To save significantly on fixed costs, Idea Inc. plans to contract out the actual printing…

In an oligopolistic market there are            many buyers.        few buyers.        few sellers.        many sellers.