Target Set high prices T: $5 million W: $3 million Set low prices T: $6 million W: $12 million Set low prices T: $9 million W: $7 million T: $8 million W: $6 million Walmart Set high prices Target and Walmart must decide whether to lower their prices, based on the potential economic profits shown in the table above. (A "T" indicates Target's profit and a "W" indicates Walmart's profit.) Who has a dominant strategy?

Target Set high prices T: $5 million W: $3 million Set low prices T: $6 million W: $12 million Set low prices T: $9 million W: $7 million T: $8 million W: $6 million Walmart Set high prices Target and Walmart must decide whether to lower their prices, based on the potential economic profits shown in the table above. (A "T" indicates Target's profit and a "W" indicates Walmart's profit.) Who has a dominant strategy?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question 3 The inverse market demand for fax paper is given by P=100-Q. There are two firms who produce fax paper. Firm 1 has al cost of production of C₁= 15*Q₁ and firm 2 has a cost of production of C₂=20*Q₂. 1) Suppose firm 1 and firm 2 compute simultaneously in quantities. What are the Cournot quantities and prices? What are the profits of firm 1 and 2? 2) Suppose firm 1 and firm 2 compete simultaneously in prices. What are the Bertrand quantities and prices? What are the profits of firm 1 and 2? 3) Suppose that firm play a Stackelberg game. First firm 1 sets the quantity in t=1, then, knowing which quantity firm 1 has set, firm 2 chooses the quantity in t=2. What are the Stackelberg quantities and prices? What are the profits od firm 1 and 2? Compared to part a) which firm benefits and which firm loses?
Starbucks has been very successful selling high-priced coffee despite the fact that consumers could easily substitute Starbucks coffee for less expensive coffee or substitute its coffee for less expensive drinks like soda, bottled water, or fitness drinks. a) Why do you think Starbucks has historically been so successful avoiding substitutes? b) Do you think its advantage is eroding in this area? If so why? c) If its advantage is eroding, what could the firm do to change this situation?
Question 11. Consider the market for flounders (a sort of fish). The demand curve in the northern part of the country is given by QN (P) = 2000-100P while that in the southern part is Qs(P) = 5000-500P. The supply curve for the entire country is Q(P) = 20P. What is the market demand for the entire country (i.e., northern and southern part combined) at a price of P=11 (round to the nearest integer if needed)? a) Q = 199 b) Q =10 c) Q =900 d) Q = 400
The widget market is competitive and includes no transaction costs. Five suppliers are willing to sell one widget at the following prices: $26, $14, $10, $5, and $3 (one seller at each price). Five buyers are willing to buy one widget at the following prices: $10, $14, $26, $34, and $42 (one buyer at each price). For each price shown in the following table, use the given information to enter the quantity demanded and quantity supplied. Price Quantity Demanded Quantity Supplied ($ per widget) (widgets) (widgets) $3 $5 $10 $14 $26 $34 $42 In this market, the equilibrium price will be per widget, and the equilibrium quantity will be widgets.
The market for organic and locally sourced foods has skyrocketed over the past decade as consumers focus on improving their eating habits. However, severe droughts have caused organic food prices to rise significantly, forcing many consumers to shop at conventional supermarkets (which are increasingly adding organic food options) instead of organic food markets such as Whole Foods. In response, companies such as Whole Foods have begun offering more nonorganic options on their store shelves in order to provide their consumers with more affordable options. Based on this response, what did companies such as Whole Foods realize about the elasticity of demand for organic foods that caused them to lower their prices by changing the type of foods they sell?
10.
Suppose a town only has two petrol stations, United and BP. Each could choose to charge a high price or low price, as shown in the matrix below. ВР BP charges a low price: BP has low profit; United BP charges a high price: BP has no profit; United has high profit United charges a United low price: has low profit ВР United charges a high price: has BP has average profit; United high profit; United has no has average profit profit (a) What is the dominant strategy for the above matrix (i.e., a Nash equilibrium)? Explain briefly (b) If the two petrol stations could collude, what would be the likely strategy? Explain briefly. (c) Briefly explain the principles of the 'kinked' demand curve by using an example such as pricing a product by the two supermarket giants.
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In October 2018 Canada agree to open the dairy market to US producers as part of the new NAFTA agreement (USMCA). Use the following information to find the price and the number of firms in each country's market, and the price and number of firms in the aggregate market. Demand function For country i (i=USA or Canada) P, = 6000 + 25 Cost Function C, = 1,000, 000+ 6000 * Q, For country i (i=USA or Canada) Market size • Market size Canada Scananda = 1,000, 000 • Market size USA S,"S= 4,000, 000 The number of firms in Canada is equal to: Answer: Price in Canada is equal to: Answer: Number of firms in USA is equal to: Answer: Price in USA is equal to Answer: Number of firms in the integrated market is equal to: Answer:
Exercise A.9 In a market only two firms produce a homogeneous good. You work on one of them and are tasked with drawing up the production strategy for the coming year. The two companies in the market have the same information and the objective of both is the maximization of their profit. You know: the inverse market demand curve of the good: P(Q)=200-2Q where Q = q₁ + q₂ , the function that represents the costs of your company and the rival company: C(qᵢ) = 20qᵢ (for i=1, 2), and the data in the following table, with the optimal decisions according to the different types of competition:C(qᵢ) = 20qᵢ and the data in the following table, with the optimal decisions according to the different types of competition: q1 q2 P Bertrand 45 45 20 Cournot 30 30 80 Collusion 22,5 22,5 110 a) What is more in your company's interest to compete or cooperate with the rival company? Keep in mind that explicit collusion agreements are illegal, so each…