Use the following information to answer the next 4 questions: Burger Doodle, the incumbent firm, wishes to set a limit price of $8 (rather than the profit-maximizing profit of $12) to prevent Designer Burger from entering its profitable market. The game tree below shows the payoffs for various decisions. Burger Doodle makes its pricing decision, then Designer Burger decides whether to enter or stay out of the market. If Designer Burger chooses to enter the market, then Burger Doodle may or may not decide to accommodate Designer's entry by changing its initial price to the Nash equilibrium price of $10. B. Doodle P-$12 Designer B., B. Doodle P-58 -$40,000, $75.000 Enter B. Doodle PN-$10 $25,000, $96,000 Designer B. Stay out 0. $125,000 P-$12 $95,000, $100,000 Enter B. Doodle PN-$10 $25,000, $101,000 Designer B. Stay out 0. $165.000 Question 12 In order for Burger Doodle to successfully implement a limit pricing strategy for entry deterrence, it must be able to a) convince Designer Burger that it will set the Nash price of $10 should Designer Burger decide to stay out of the market. b) convince Designer Burger that it will set the Nash price of $10 should Designer Burger decide to enter the market. c) make a credible commitment to maintain its initial price should Designer Burger decide to enter the market. d) make a credible promise to price its burgers at $12. e) make a credible threat to lower its price to $8 should Designer Burger decide to enter the market. Question 13 If the condition in the prior question is met, Burger Doodle will set its price equal to $ and it will earn $ of profit, while Designer Burger will earn $of profit. a) 8; 125,000; 0 b) 8; 75,000; -40,000 c) 10; 101,000; 25,000 d) 10; 96,000; 25,000 e) 12; 165,000; 0 Question 14 If the condition in Q12 is NOT met, Burger Doodle will set price equal to $ at decision node 3 and it will earn $_ of profit, while Designer Burger will earn $ _____ of profit. a) 8; 125,000; 0 b) 8; 75,000; -40,000 c) 10; 101,000; 25,000 d) 10; 96,000; 25,000 e) 12; 165,000; 0 Question 15 If the condition in Q12 is NOT met, Burger Doodle will set price equal to $at decision node 1 and the outcome (is, is not) a Nash equilibrium. a) 8; is b) 8; is not c) 12; is d) 12; is not

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.)

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

here are two firms in the market, Pepsi and Coke. Strategies: Low price (price promotion, LP), Medium price (regular price, RP), high price (new price strategy, HP). Payoffs: Coke, Pepsi’s Net Profits; LP, LP: $1.4m, $1.2m; LP, RP: $3.1m, $0.6m; LP, HP: $3.9m, -$1.3m. RP, LP: $1.3m, $1.8m; RP, RP: $2.0m, $1.8m; RP, HP: $4.3m, $-0.3m. HP, LP:  -$1.2m, $3.6m; HP, RP: $0.8m, $3.9m; HP, HP: $2.8m, $2.5m. In this game, the NE is (are):     (HP, HP)     (LP, LP) and (HP, HP)     (LP, LP)     There is no NE in this game     (RP, RP)

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…

To advertise or not to advertise Suppose that Creamland and Dairy King are the only two firms that sell ice cream. The following payoff matrix shows the profit (in millions of dollars) each company will earn depending on whether or not it advertises:   Dairy King Advertise Doesn't Advertise Creamland Advertise 10, 10 18, 2 Doesn't Advertise 2, 18 11, 11   For example, the upper right cell shows that if Creamland advertises and Dairy King doesn't advertise, Creamland will make a profit of $18 million, and Dairy King will make a profit of $2 million. Assume this is a simultaneous game and that Creamland and Dairy King are both profit-maximizing firms. If Creamland decides to advertise, it will earn a profit of  _________   million if Dairy King advertises and a profit of ________   million if Dairy King does not advertise.   If Creamland decides not to advertise, it will earn a profit of __________   million if Dairy King advertises and a profit of _________…

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