he outcome is a Nash-Coumot equilibrium, why di rose less than the firma' costs in this oligopoly because A demand is not perfectly inelastic. . consumers are not price sensitive. . the firms are price takers. air travel has no close substitutes.
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- Consider a "punishment" variation of the two-firm oligopoly situation shown in the figure below. Suppose that if one firm sets a low price while the other sets a high price, then the firm setting the high price can fine the firm setting the low price. Suppose that whenever a fine is imposed, X dollars are taken from the low-price firm and given to the high-price firm. RareAir's price strategy High Low $12 $15 A B High $12 $6 $6 $8 Low $15 $8 Instructions: Enter your answer as a whole number. What is the smallest amount that the fine X can be such that both firms will want to always set the high price? $O million Uptown's price strategyPictech Pricing High Low High 8, 8 4, 13 Flashfone Pricing Low 13, 4 7,7 For example, the lower-left cell shows that if Flashfone prices low and Pictech prices high, Flashfone will earn a profit of $13 million, and Pictech will earn a profit of $4 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 v price, and if Flashfone prices low, Pictech will make more profit if it chooses price. price, and if Pictech prices low, Flashfone will make more profit if it chooses If Pictech prices high, Flashfone will make more profit if it chooses a price. a dominant strategy for both Flashfone and Pictech. Considering all of the information given, pricing low If the firms do not collude, what strategies will they end up choosing? O Flashfone will choose a high price, and Pictech will choose a low price. O Both Flashfone and Pictech will choose a high price. O Both…One key difference between an oligopoly market and a competitive market is that oligopolistic firms O are price takers while competitive firms are not. sell their product at a price equal to marginal cost while competitive firms do not. O can affect the profit of other firms in the market by the choices they make while firms in competitive markets do not affect each other by the choices they make. O sell completely unrelated products while competitive firms do not
- Suppose only two airlines, United and Delta, provide flights between Atlanta and Winston - Salem. Both firms must choose whether to advertise or not advertise. The advertising strategies with corresponding profits are depicted in the payoff matrix to the right. United Airline's profits are in blue and Delta Airline's are in red United Airline's dominant strategy is to and Delta Arline's dominant strategy is to What is the Nash equilibrium for this game? O A. United and Delta will both choose not to advertise. O B. United will choose to advertise and Delta will choose not to advertise. < Previous KalturaCapture....dmg tf00002104_wac.docx WConsider a oligopoly with two firms. Each firm has constant marginal cost of 3 dollar per unit and zero fixed costs. Suppose the market demand curve is P = 15-Q, where Q=Q1+Q2 is the sum of the quantities produced by both firms. Suppose each firm can produce either 1, 2, 3, or 4 units. Which of the following is an optimal collusive outcome for the firms? O Each firm produces 2 units. Each firm produces 4 units. O Each firm produces 3 units. O Each firm produces 1 unit.bok rint An oligopoly producing a homogeneous product is comprised of three firms that act like a cartel. Assume that these three firms have identical cost schedules. Assume also that if any one of these firms sets a price for the product, the other two firms charge the same price. As long as they all charge the same price they will share the market equally; and the quantity demanded of each will be the same. Below is the total-cost schedule of one of these firms and the demand schedule that confronts it when the other firms charge the same price as this firm. Complete the marginal-cost and marginal- revenue schedules facing the firm. erences Mc Graw Hill Output Total cost Marginal cost Price Quantity demanded Marginal revenue 0 1 23456 7 8 $0 180 300 480 720 1,020 1,380 1,800 2,280 Short Anewor LA JUL 26 $780 720 660 600 540 480 420 360 Toolbar navigation (a) What price would be charged, what output would be produced, and what profit would be made by this firm? (b) If the firms…
- Suppose that there are two firms producing a homogenous product and competing in Cournot fashion and let the market demand be given by Q = 240- Assume for simplicity that each firm operates with zero total cost. Find each firm's Cournot Nash equilibrium profit for each firm. $21600 O $19200 O $18000 O $16000Discuss what can be the expected resultof the firms in the oligopoly, that is, that can be the expected Nash Equilibrium solution fora household cleaning appliance.One of the predictions of the oligopoly model is that: non-price competition is uncommon and price-cutting competition among rivals is common. O prices tend to remain relatively stable despite short-run fluctuations in market demand. the firms' costs of production (raw material, labor, advertising) remain constant over time. only one buyer (monopsony) will result in the long run. MacBook Pro -> G Search or type URL %23 3 4. 7 8 W R Y
- Discuss what can be the expected resultof the firms in the Cournot oligopoly, that is, that can be the expected Nash Equilibrium solution fora household cleaning appliance firm.Suppose that an oligopolistic is charging $21 per unit of output and selling 31 units each day. What is its daily total revenue? Also suppose that previously it had lowered its price from $21 to $19, rivals matched the price cut, and the firmâs sales increased from 31 to 32 units. It also previously raised its price from $21 to $23, rivals ignored the price hike, and the firmâs daily total revenue came in at $482. Which of the following is most logical to conclude? The firmâs demand curve is (a) inelastic over the $21 to $23 price range, (b) elastic over the $19 to $21 price range, (c) a linear(straight) down sloping line, or (d) a curve with a kink in it?Price Demand Quantity 52. According to the graph of oligopoly above, which of the following statements is correct? O With perfect collusion, price and output levels are indicated by point A O Without collusion, price and output levels are indicated by point B With perfect collusion, price and output levels are indicated by point C O With perfect collusion, price and output levels are indicated by point B O Even with collusion, oligopolistic firms Produce output Q1 and charge price P2 in this industry will be unable to earn economic profit