For the R & D game that Kimberly-Clark(Kleenex) and Procter & Gamble (Puffs) Play. Each firm has two strategies: Do R&D or do not R&D. If neither firm does R&D, Kimberly-Clark makes $30 million and Procter & Gamble makes $70 million. If both does R&D, Kimberly-Clark makes $5 million and Procter & Gamble makes $45 million. if only Procter & Gamble does R&D, it makes $85 million and Kimberly-Clark makes -$10 million, and if only Kimberly-Clark does R&D it makes $85 million and Procter & Gamble makes -$10 million. 7) Create the payoff matrix for this game?

For the R & D game that Kimberly-Clark(Kleenex) and Procter & Gamble (Puffs) Play. Each firm has two strategies: Do R&D or do not R&D. If neither firm does R&D, Kimberly-Clark makes $30 million and Procter & Gamble makes $70 million. If both does R&D, Kimberly-Clark makes $5 million and Procter & Gamble makes $45 million. if only Procter & Gamble does R&D, it makes $85 million and Kimberly-Clark makes -$10 million, and if only Kimberly-Clark does R&D it makes $85 million and Procter & Gamble makes -$10 million. 7) Create the payoff matrix for this game?

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter15: Strategic Games

Section: Chapter Questions

Problem 9MC

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aepioymentld=598281800483229979995799&elSBN=9780357133606&id%3D1061548135&snapshotld%32200166& 6. Using a payoff matrix to determine the equilibrium outcome Suppose there are only two firms that sell smartphones: Flashfone and Pictech. The following payoff matrix shows the profit (in millions of dollars) each company will earn, depending on whether it sets a high or low price for its phones. Pictech Pricing High Low High 11, 11 2, 15 Flashfone Pricing Low 15, 2 8, 8 For example, the lower-left cell shows that if Flashfone prices low and Pictech prices high, Flashfone will earn a profit of $15 million, and Pictech will earn a profit of $2 million. Assume this is a simultaneous game and that Flashfone and Pictech are both profit-maximizing firms. If Flashfone prices high, Pictech will make more profit if it chooses a price, and if Flashfone prices low, Pictech will make more profit if it chooses ▼ price. a If Pictech prices high, Flashfone will make more profit if it chooses a price, and…
There are two competing firms, Jack and Jill represents a normal form of a game of two firms that produce a widget that is identical in quality. The rows in the table below correspond to the two different strategies available to firm Jack: price High or Low. The columns correspond to the same strategies for Jill: price High or price Low. The numbers in the tables show the profits. The number on the left (first number) is Jack firm profit, and the numbers on the right (second number) is Jill’s firm profit in millions of dollars. For example, If both price High (the upper left cell), then they each get 10 million in profits. If a firm prices high, the other firm prices low, consumers will have a choice to go to the low firm and the firm that prices high will get zero while the firm that prices low will get all market share. The game is played simultaneously, meaning same time and neither will know what the decision is.…
Samsung Expensive Cheap Apple Expensive Cheap 2,6 3,3 4,4 6,2 Apple and Samsung control the majority of the Smart Phones. Suppose the diagram above represents their strategic options, either to offer an expensive or a cheap phone in the market. If both firms offer an expensive phone, they will each earn 4 billion dollars. If Samsung offers a cheap phone, while Apple offers only an expensive phone, Samsung will earn $6 billion and Apple will earn $2 billion, and vice versa. If they both offer a cheap phone, they will each earn $3 billion. What are the profits in the Nash Equilibrium? Both firms earn $4 billion. Samsung earns $2 billion and Apple earns $6 billion. Samsung earns $6 billion and Apple earns $2 billion. Both firms earn $3 billion.
4. Using a payoff matrix to determine the equilibrium outcome 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. Flashfry Pricing High Low Warmbreeze Pricing High Low 11, 11 2,13 13, 2 10, 10 For example, the lower-left cell shows that if Flashfry prices low and Warmbreeze prices high, Flashfry will earn a profit of $13 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. price, and if Flashfry prices low, Warmbreeze will make more profit if it If Flashfry prices high, Warmbreeze will make more profit if it chooses a chooses a price. If Warmbreeze prices high, Flashfry will make more profit if it chooses a chooses a price. Considering all of the…
Apple and Samsung control the majority of the Smart Phones. Suppose the diagram above represents their strategic options, either to offer an expensive or a cheap phone in the market. If both firms offer an expensive phone, they will each earn 4 billion dollars. If Samsung offers a cheap phone, while Apple offers only an expensive phone, Samsung will earn $6 billion and Apple will earn $2 billion, and vice versa. If they both offer a cheap phone, they will each earn $3 billion. What are the profits in the Nash Equilibrium? a. Samsung earns $2 billion and Apple earns $6 billion. b. Both firms earn $3 billion. c. Both firms earn $4 billion. d. Samsung earns $6 billion and Apple earns $2 billion.
The following table shows two firms in a single-stage game. Each firm makes its decision without knowledge of the other firm's decision. The payoffs for each firm represent economic profits, and each firm strictly prefers more economic profit than less. In the Nash equilibrium of this game, Pepsi earns a profit of _and Coca-Cola earns a profit of Pepsi Advertise Does Not Advertise $50 million $37.5 million Advertise $50 million $75 million Coca-Cola $75 million $67.5 million Does Not Advertise $37.5 million $67.5 million $67.5 million; $67.5 million d. $75 million; $37.5 million а. b. $30 million; $30 million $37.5 million; $75 million е. $50 million; $50 million с.
Bob's Product- Strategy Pizza No Pizza Sam's Product Strategy No Pizza A U Pizza -$10 с -$10 $0 $15 B D $15 $10 $0 $10 Refer to the payoff matrix. Bob's Burgers and Sam's Sandwiches are competing restaurants in a small town. Both are considering adding pizza to their line of products. If this is a sequential game but we don't know who moves first, what can we say about the final outcome? A. There is no Nash equilibrium attainable for this game. B. Cell A represents the only Nash equilibrium possible for this game. C. Cell D represents the only Nash equilibrium possible for this game. D. Cells B and C both represent possible Nash equilibrium outcomes for this game.
Suppose that Expresso and Beantown are the only two firms that sell coffee. The following payoff matrix shows the profit (in millions of dollars) each company will earn depending on whether or not it advertises: Beantown Advertise Doesn't Advertise Expresso Advertise 8, 8 15, 2 Doesn't Advertise 2, 15 11, 11 For example, the upper right cell shows that if Expresso advertises and Beantown doesn't advertise, Expresso will make a profit of $15 million, and Beantown will make a profit of $2 million. Assume this is a simultaneous game and that Expresso and Beantown are both profit-maximizing firms. If Expresso decides to advertise, it will earn a profit of million if Beantown advertises and a profit of million if Beantown does not advertise. If Expresso decides not to advertise, it will earn a profit of million if Beantown advertises and a profit of million if Beantown does not advertise. If Beantown advertises, Expresso makes a higher profit if…
Consider a market with two firms, Kellogg and Post, that sell breakfast cereais. Both companies must choose whether to charge a high price ($5.00) or a low price ($3.00) for their cereals. These price strategies, with corresponding profits, are depicted in the payoff matrix to the right. Kellogg's profits are in red and Post's are in blue. What is the cooperative equilibrium for this game? Kelogg Price- $5.00 Price $3.00 OA The cooperative equilibrium is for Kelogg to choose a price of $3.00 and Post to choose a price of $5.00. OB. The cooperative equilibrium is for Kellogg and Post to both choose a price of $3.00. OC. The cooperative equilibrium is for Kellogg and Post to both choose a price of $5.00. OD. The cooperative equilibrium is for Kellogg to choose a price of $5.00 and Post to choose a price dk $3.00. OF Acooperative equilibrium does not exist for this game 00 Price= $5.00 1200 S000 $1.000 Post Is the cooperative equilibrium ikely to occur? $1.000 Price $3.00 450 The…
Google and Microsoft are the two dominant firms in the internet search market. They each must decide on whether to have a large budget for research and development (R&D). Their respective payoffs are in the following matrix: Google Microsoft Large R& D Small R& D Large R& D +$30m 0 What is the Nash equilibrium? +$20m +$30m Small R& D +$70m +$50m 0 +$40m Both google and Microsoft have small R&D budgets. There is not a Nash equilibrium because both firms don't have a dominant strategy. Both google and Microsoft have large R&D budgets. Google has a large, and Microsoft a small, R&D budgets.
The following table depicts two firms in a single-stage duopoly game. Each firm makes its decision without knowledge of the other firm's decision. The payoffs for each firm represent economic profits, and each firm strictly prefers more economic profit than less. If X is greater than $3,500, then there is/are Tasha's Flower ShopP Produce 300 flowers Produce 200 flowers $2,500 $3,500 Produce 200 $2,500 flowers $1,000 Joshua's Flower Shop $1,000 Produce 300 $3,500 flowers only one Nash equilibrium, and this game would be considered a prisoner's dilemma. b. two Nash equilibriums, and this game would be considered a prisoner's dilemma. three Nash equilibriums, and this game would be considered a prisoner's dilemma. d. only one Nash equilibrium, and this game would not be considered a prisoner's dilemma. two Nash equilibriums, and this game would not be considered a prisoner's dilemma. а. c. е.
A small town has a duopoly in its tattoo market. Two firms, "Thread the Needle" and "Ink about it" are both competitors. Daily profit is listed in the payoff matrix. The green payouts belong to "Thread the Needle" and the red, "Ink about it". In this game, what is the Nash Equilibrium? A Thread the Needle: don't advertise, Ink about it: don't advertise B Thread the Needle: don't advertise, Ink about it: advertise C Thread the Needle: advertise, Ink about it: advertise D Thread the Needle: advertise, Ink about it: don't advertise