EBK PRINCIPLES OF MICROECONOMICS (SECON
EBK PRINCIPLES OF MICROECONOMICS (SECON
2nd Edition
ISBN: 9780393616149
Author: Mateer
Publisher: W.W.NORTON+CO. (CC)
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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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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?
Using a payoff matrix to determine the equilibrium outcome Suppose there are only two firms that sell smart phones, 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 Flashfone Pricing High 11, 11 2, 18 Low 18, 2 10, 10 For example, the lower, left cell shows that if Flashfone prices low and Pictech prices high, Flashfone will earn a profit of $18 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 a _____ price.   If Pictech prices high, Flashfone will make more profit if it chooses a _____ price, and if Pictech prices low, Flashfone will make more…
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