These are revision question for my upcoming test. They are from the textbook and are not graded. Question 11.1 Two computer firms, A and B, are planning to market network systems for officeinformation management. Each firm can develop either a fast, high-quality system(H), or a slower, low-quality system (L). Market research indicates that the resultingprofits to each firm for the alternative strategies are given by the following payoffmatrix:Firm BHLH50, 4060, 45Firm AL55, 5515, 201.1.1 If both firms make their decisions at the same time and follow maximin (low-risk)strategies, what will the outcome be? With reference to the definition, explain how theoutcome is determined.1.1.2 Suppose both firms try to maximise profits. What will the outcome be if Firm A cancommit first?1.2An industry with many stores offer laminating as a service to their customers.Suppose that each store that offers this service has a cost functionC(q) = 50 +0.5q+0.08q² and a marginal cost MC=0.5 +0.16q. Suppose the goingrate for laminating is R8.50 per sleeve which each store is compelled to charge.1.2.1Is the industry in long run equilibrium? Use calculations to either prove or disproveyour findings.1.2.2 Based on your answer in 1.2.1, identify two key features of long run equilibrium anddetermine the price associated with this period.

The pay-off matrix shows the mixtures of the outcomes that are attainable from any strategic…

estion 1 Two computer firms, A and B, are planning to market network systems for office information management. Each firm can develop either a fast, high-quality system (H), or a slower, low-quality system (L). Market research indicates that the resulting profits to each firm for the alternative strategies are given by the following payoff matrix: Firm B H L H 50, 40 60, 45 Firm A L 55, 55 15, 20 1 If both firms make their decisions at the same time and follow maximin (low-risk) strategies, what will the outcome be? With reference to the definition, explain how the outcome is determined. 2 Suppose both firms try to maximise profits. What will the outcome be if Firm A can commit first?

estion 1 Two computer firms, A and B, are planning to market network systems for office information management. Each firm can develop either a fast, high-quality system (H), or a slower, low-quality system (L). Market research indicates that the resulting profits to each firm for the alternative strategies are given by the following payoff matrix: Firm B H L H 50, 40 60, 45 Firm A L 55, 55 15, 20 1 If both firms make their decisions at the same time and follow maximin (low-risk) strategies, what will the outcome be? With reference to the definition, explain how the outcome is determined. 2 Suppose both firms try to maximise profits. What will the outcome be if Firm A can commit first?

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

Chapter16: Bargaining

Section: Chapter Questions

Problem 16.1IP

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Consider any market that has a demand curve given by: Qd = 125 - 0.4P. Being the total quantity demanded in the market, given the quantity in millions of units and the market price, calculated in monetary units. Imagine that there are 2 Cournot oligopolists operating in this market that have Cmg = CVme = 2. About this market, the question is: a) What is the reaction curvature of the oligopolists? b) What will be the production of each of the companies? c) What is the sale price for oligopolists?
1.-There are only two firms in the market, Firms A and B, producing differentiated products. Specifically, the demands for the two firms' products are given by qA = 30 − 2pA + pB and qB = 15 − 2pB + pA, where pi denotes the price charged by Firm i and qi denotes the resulting number of units that will be purchased from Firm i. Each firm can produce as much as it chooses, at zero marginal cost. The firms compete with one another in prices. (a) Draw the two firms' reaction functions in a diagram with p1 and p2 on the axes. (b) Determine the equilibrium prices and quantities.
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Youngstown-Warren Regional Airport (YNG) has had a difficult time securing passenger service from a commercial airline. a.) A few years ago, the Port Authority offered an incentive to United with guaranteed revenue equal to approximately $1.5 million, but United declined saying it was not sufficient. Suppose United anticipated that it would cost $1 million to offer flights from Youngstown, so with a guaranteed revenue of $1.5 million, their anticipated profit would equal $500,000. Given that they still chose to decline offering service from YNG, what do you know must be true? Put this in terms of implicit costs and economic profit. b.) In 2019, YNG’s only commercial carrier, Allegiant Air stopped offering service from YNG, despite the fact that it was known to be profitable. Allegiant Air’s service from YNG was known to be profitable. Why would Allegiant Air pull service from YNG even if it had been their service from YNG had been generating a profit? Note, Allegiant started…
1.-There are only two firms in the market, Firms A and B, producing differentiated products. Specifically, the demands for the two firms' products are given by qA = 30 − 2pA + pB and qB = 15 − 2pB + pA, where pi denotes the price charged by Firm i and qi denotes the resulting number of units that will be purchased from Firm i. Each firm can produce as much as it chooses, at zero marginal cost. The firms compete with one another in prices. (c) Now suppose firms choose quantities, instead of prices. Obtain the equilibrium choices