1 Sonic Enter Stay Out Dairy Queen (1000, 8000) High Prices, Low Prices (3000, 5000) (-1000, 4000) Consider the entry-deterrence game shown on the game tree above. Use this information to answer the questions #14 and #15. 14. In this situation, Dairy Queen has a. an incentive to threaten high prices, which would be credible. b. an incentive to threaten low prices, which would be credible. c. an incentive to threaten high prices, which would be an empty threat. d. an incentive to threaten low prices, which would be an empty threat. e. no incentive to make a threat. 15. Dairy Queen will receive a payoff of in the SPE of this game. a. $1,000 b. $3,000 c. $4,000 d. $5,000 e. $8,000
1 Sonic Enter Stay Out Dairy Queen (1000, 8000) High Prices, Low Prices (3000, 5000) (-1000, 4000) Consider the entry-deterrence game shown on the game tree above. Use this information to answer the questions #14 and #15. 14. In this situation, Dairy Queen has a. an incentive to threaten high prices, which would be credible. b. an incentive to threaten low prices, which would be credible. c. an incentive to threaten high prices, which would be an empty threat. d. an incentive to threaten low prices, which would be an empty threat. e. no incentive to make a threat. 15. Dairy Queen will receive a payoff of in the SPE of this game. a. $1,000 b. $3,000 c. $4,000 d. $5,000 e. $8,000
Chapter10: Monopolistic Competition And Oligopoly
Section: Chapter Questions
Problem 3.9P
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