EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
expand_more
expand_more
format_list_bulleted
Question
Chapter 12, Problem 12.7P
To determine
To discuss:Relationship between number of firms in the market ‘N’, and probability ‘g’ that the game continues form one period to another. Also stating the greatest number of firms for which collusion would be sustainable if g is 0.95.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Consider the following two player game:
Player 1
ABCD
X
1,2
4,1
5,2
2,3
Player 2
Y
2,2
3.5
1
4,4
0.4
Z
5.1
3,3
7,0
7,5
a. Find the strategies that survive iterated elimination of weakly and strictly dominated strategies.
b. Find the best responses to each strategy and find all (pure strategy) Nash equilibria.
The table given below represents the payoff matrix of firms A and B, when they
choose to produce low or high output. In each cell, the figure on the left indicates
Firm B's payoffs and the figure on the right indicates Firm A's payoffs.
Firm A
Firm B
Low Output
High Output
Low Output
60
50
20
10
High Output
30
40
40
30
Which of the following statements about the two firms must be true?
1. If Firm B produces low output, Firm A will also produce low output.
2. If Firm B produces high output, Firm A will produce low output.
3. If Firm A produces high output, Firm B will also produce high output.
4. If Firm A produces low output, Firm B will produce high output.
Exercise 6.7.
Suppose two identical companies produce wood stoves and they are the only ones on the market. Its costs are given by: C1 (q1 )=200q1 and C2 (q2) = 200q2. And the inverse market demand curve is: P=2000-2Q, where Q =q1 + q2
Get the Cournot-Nash equilibrium. Calculate the profits of each company. Show graphically.
Suppose that the two companies form a cartel to maximize joint profits. How many stoves will you produce? Calculate the profits of each company. Represent graphically.
Managers now note that explicit agreements to collude are illegal. Each company must decide on its own whether to produce the amount of Cournot or that of the cartel.
Chapter 12 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
Ch. 12.2 - Prob. 1TTACh. 12.2 - Prob. 2TTACh. 12.2 - Prob. 1MQCh. 12.2 - Prob. 2MQCh. 12.2 - Prob. 1.1TTACh. 12.2 - Prob. 2.1TTACh. 12.2 - Prob. 1.1MQCh. 12.3 - Prob. 1MQCh. 12.3 - Prob. 2MQCh. 12.3 - Prob. 1TTA
Ch. 12.3 - Prob. 2TTACh. 12.3 - Prob. 1.1MQCh. 12.3 - Prob. 2.1MQCh. 12.3 - Prob. 1.1TTACh. 12.3 - Prob. 2.1TTACh. 12.4 - Prob. 1TTACh. 12.4 - Prob. 2TTACh. 12.5 - Prob. 1MQCh. 12.5 - Prob. 2MQCh. 12.5 - Prob. 1TTACh. 12.5 - Prob. 2TTACh. 12.6 - Prob. 1MQCh. 12.6 - Prob. 2MQCh. 12 - Prob. 1RQCh. 12 - Prob. 2RQCh. 12 - Prob. 3RQCh. 12 - Prob. 4RQCh. 12 - Prob. 5RQCh. 12 - Prob. 6RQCh. 12 - Prob. 7RQCh. 12 - Prob. 8RQCh. 12 - Prob. 9RQCh. 12 - Prob. 10RQCh. 12 - Prob. 12.1PCh. 12 - Prob. 12.2PCh. 12 - Prob. 12.3PCh. 12 - Prob. 12.4PCh. 12 - Prob. 12.5PCh. 12 - Prob. 12.6PCh. 12 - Prob. 12.7PCh. 12 - Prob. 12.8PCh. 12 - Prob. 12.9PCh. 12 - Prob. 12.10P
Knowledge Booster
Similar questions
- Consider the following sequential move game of imperfect information. Consider the following sequential move game of imperfect information. In the event that Otis chooses Down, then they play the simultaneous move game shown in normal form (where Otis chooses between X and Y and Maeve simultaneously chooses between W and V). A (25,6) Maeve Up B (5,10) (12,5) Otis Middle Maeve Down w Otis (0, 0) (10, 10) Y (15, 15) (0, 0) Find all (pure strategy) subgame perfect Nash equilibria.arrow_forwardTwo firms, X and Y, are planning to market their new products. Each firm can develop TV, Laptop. Market research indicates that the resulting profits to each firm for the alternative strategies are given by the following payoff matrix : MATRIX IS ATTACHED Find the Nash equilibria for this game, assuming that both firms make their decisions at the same time. (explain the decision step by step) If each firm is risk averse and uses a maximin strategy, what will be the resulting equilibrium? (explain the decision step by step) What will be the equilibrium if Firm X makes its selection first? If Firm Y goes first?arrow_forwardIn the following games, all payoffs are listed with the row player's payoffs first and the column player's payoffs second. GAME 33 Player A Player B B1 10, 12 A1 A2 9,3 A3 8, 10 In Game 33 above, B2 B3 8,8 12, 10 7,6 11, 1 9,4 14, 3 B1 is a dominated strategy for Player B B2 is a dominated strategy for Player B B3 is a dominated strategy for Player B Player B has no dominated strategies.arrow_forward
- Suppose that Flashfry and Warmbreeze are the only two firms in a hypothetical market that produce and sell air fryers. The following payoff matrix gives profit scenarios for each company (in millions of dollars), depending on whether it chooses to set a high or low price for fryers. Warmbreeze Pricing High Low Flashfry Pricing High 11, 11 2, 15 Low 15, 2 8, 8 For example, the lower-left cell shows that if Flashfry prices low and Warmbreeze prices high, Flashfry will earn a profit of $15 million, and Warmbreeze will earn a profit of $2 million. Assume this is a simultaneous game and that Flashfry and Warmbreeze are both profit-maximizing firms. If Flashfry prices high, Warmbreeze will make more profit if it chooses a price, and if Flashfry prices low, Warmbreeze will make more profit if it chooses a price. If Warmbreeze prices high, Flashfry will make more profit if it chooses a price, and if Warmbreeze prices low, Flashfry will make more profit if…arrow_forwardD Question 11 Consider the following Extended Form Game: O 1 02 O 3 A' 04 (9,5) A P2 P1 B' A' (5,2) (8,5) B x A (1,6) P2 B' According to backwards induction, in how many turn does the game end? P1 B (6,7)arrow_forwardSuppose that Fizzo and Pop Hop are the only two firms that sell orange soda. The following payoff matrix shows the profit (in millions of dollars) each company will earn depending on whether or not it advertises: Рop Hop Advertise Doesn't Advertise Advertise 8, 8 15, 2 Fizzo Doesn't Advertise 2, 15 11, 11 For example, the upper right cell shows that if Fizzo advertises and Pop Hop doesn't advertise, Fizzo will make a profit of $15 million, and Pop Hop will make a profit of $2 million. Assume this is a simultaneous game and that Fizzo and Pop Hop are both profit-maximizing firms. If Fizzo decides to advertise, it will earn a profit of $ million if Pop Hop advertises and a profit of $ million if Pop Hop does not advertise. If Fizzo decides not to advertise, it will earn a profit of $ million if Pop Hop advertises and a profit of $ million if Pop Hop does not advertise. If Pop Hop advertises, Fizzo makes a higher profit if it chooses If Pop Hop doesn't advertise, Fizzo makes a higher…arrow_forward
- Answer the next question based on the following payoff matrix for two oligopolistic firms in which the numbers indicate the prof each firm. Firm B Multiple Choice High Price O Low Price High Price A = $250 B = $250 A = $200 B = $325 Firm A Low Price A = $325 B = $200 Assume that Firm B adopts a low-price strategy while Firm A maintains a high-price strategy. Compared to the results from a hig firms, Firm B will now A = $175 B = $175 lose $75 million in profit and Firm A will gain $50 million in profit. gain $50 million in profit and Firm A will lose $50 million in profit. Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism. Answer completely and accurate answer. Rest assured, you will receive an upvote if the answer is accurate.arrow_forwardConsider the game in the table below. Is the Nash Equilibrium efficient? Enter 111 for YES and 222 for NO. firm a left right firm b up 9,5 10,6 down 6,10 7,9arrow_forwardIn a repeated game of Bertrand competition, suppose two firms are playing the grim trigger strategy. They discount future payoffs at B. A firm will play the monopoly price and earn 8 every period, so long as the other firm does the same. However, if a firm deviates from playing the monopoly price, the other firm plays the one-shot Bertrand outcome forever. Collusion is a Nash equilibrium if B is Select J [ Select) Space 1 options: less than or equal to, equal to, greater than or equal to Space 2 options: 0, 0.5, 1, 8, 16arrow_forward
- Please no written by hand and no image (Bertrand's duopoly game with discrete prices) Consider the variant of the example of Bertrand's duopoly game in this section in which each firm is restricted to choose a price that is an integral number of cents. Take the monetary unit to be a cent, and assume that c is an integer and a>c+!. Is (c,c) a nash equilibrium of this game? Is there any other nash equilibrium?arrow_forward10:04 PM cb = Chegg Economics Vo LTE expert.chegg.com/expertqna Time remaining: 00:09:49 Consider the following payoff matrix for two oligopolists that are deciding what quantity to produce: Firm 2 High Quantity Low Quantity $70k; $70k $130k; $20k High Quantity Firm 1 $20k; $130k $100k; $100k Low Quantity In the Nash equilibrium of this game, what are the payoffs to each firm? O a. Firm 1 receives $130k and Firm 2 receives $20k. O b. Firm 1 receives $20k and Firm 2 receives $130k. O c. Firm 1 receives $100k and Firm 2 receives $100k. O d. Firm 1 receives $70k and Firm 2 receives $70k. Answer Skip 4G Exit 2 ¹20%arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Managerial Economics: Applications, Strategies an...EconomicsISBN:9781305506381Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. HarrisPublisher:Cengage Learning
Microeconomics: Principles & PolicyEconomicsISBN:9781337794992Author:William J. Baumol, Alan S. Blinder, John L. SolowPublisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning
Microeconomics: Principles & Policy
Economics
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:Cengage Learning