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. no incentive to make a threat. е.

ECON MICRO
5th Edition
ISBN:9781337000536
Author:William A. McEachern
Publisher:William A. McEachern
Chapter10: Monopolistic Competition And Oligopoly
Section: Chapter Questions
Problem 3.9P
icon
Related questions
Question
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
an incentive to threaten high prices, which would be credible.
b. an incentive to threaten low prices, which would be credible.
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.
а.
с.
е.
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
Transcribed Image Text: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 an incentive to threaten high prices, which would be credible. b. an incentive to threaten low prices, which would be credible. 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. а. с. е. 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
Expert Solution
steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Property Rights, Bargaining And The Coase Theorem
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
ECON MICRO
ECON MICRO
Economics
ISBN:
9781337000536
Author:
William A. McEachern
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Microeconomic Theory
Microeconomic Theory
Economics
ISBN:
9781337517942
Author:
NICHOLSON
Publisher:
Cengage