EBK PRINCIPLES OF MICROECONOMICS (SECON
2nd Edition
ISBN: 9780393616149
Author: Mateer
Publisher: W.W.NORTON+CO. (CC)
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Question
Chapter 13, Problem 9SP
(a):
To determine
Dominant strategy of the pizza factory.
(b):
To determine
Dominant strategy of the P pie.
(c):
To determine
Nash Equilibrium in the game.
(d):
To determine
Impact of P pie entrance and action of P factory.
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Students have asked these similar questions
Two firms operating in the same market must decide between charging a high price or a low
price. The Payoffs are as below. Firm A's profit is listed before the comma, B's profit after the
comma.
Firm B
Firm A
Low Price
High Price
Low Price
16, 17
7, 28
High Price
28, 7
22, 22
If each firm tries to choose a price that is optimal, regardless of the other firm's price, what is
the Nash equilibrium? Does either firm have a dominant strategy?
Fill in the chart attached and answer the following questions:
a) Bert's dominant strategy is to: (pick the correct answer below )
- no dominant strategy
- fish for 20 hours per week
-fish for 40 hours per week.
b) Ernie's dominant strategy is to: ( pick the correct answer below)
- no dominant strategy
- fish for 20 hours per week
-fish for 40 hours per week.
c) Is there a Nash Equilibrium? ( pick the correct answer below)
- No
- Yes, both fish for 20 hours per week
- Yes, one fisher for 40 and the other for 20.
- Yes both fish for 30 hours per week.
d) Is there an incentive for Bert and Ernie to collude? Why or why not?
Consider a market organized along a 1 mile stretch of road (from D=0 to D=1). Consumers along the stretch of road are uniformly distributed. There are two firms, with Firm 1 located at mile marker .5 and Firm 2 located at mile marker 1.0 and they compete on prices. Customers choose which store to shop at according to P + cD, where c=2 and D is the distance to the store. What is the Nash Equilibrium?
Chapter 13 Solutions
EBK PRINCIPLES OF MICROECONOMICS (SECON
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Similar questions
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- The above table shows the payoffs that either Darrin or Rob receive depending on whether they choose a high or a low price strategy. Who has a dominant strategy? A. Darrin. B. Rob. C. Darrin and Rob. D. Neither Darrin nor Rob.arrow_forwardWhat is the difference between Dominant strategy and mixed strategy? Please explainarrow_forwardConsider two beer producers, POTUS Pilsner and Supreme Court Stout. If they advertise, they can both sell more beer and increase their revenue. However, the cost of advertising more than offsets the increased revenue so that each producer ends up with a lower profit than if they do not advertise. On the other hand, if only one advertises, that producer increases its market share and also its profit. Construct a payoff matrix using the following hypothetical information: If neither producer advertises, each earns a profit of $35 million per year. If both advertise, each earns a profit of $20 million per year. If one advertises and the other does not, the producer who advertises earns a profit of $50 million and the producer who does not advertise earns a profit of $9 million. If POTUS Pilsner wants to maximize profit, will it advertise? Briefly explain. If Supreme Court Stout wants to maximize profit, will it advertise? Briefly explain. Is there a dominant strategy for each…arrow_forward
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